What Did You Buy Today?

[Otter]

(09-13-2019, 07:50 PM)stockguru Wrote:

(09-13-2019, 07:22 PM)Otter Wrote: I really like this recent article by Chuck Carnevale, explaining his philosophy on value at time of purchase. He is far more eloquent and a more effective writer when it comes to conveying these concepts than I could ever hope to be:

https://seekingalpha.com/article/4290081...ket-timing

Short-term fluctuations in price don’t really concern me on a long-term time horizon. I will never buy any stock at the absolute bottom. That’s market timing. I can’t do that. All I can do is decide if value is fair or better at the time of purchase.

A stock that is 30% above its long-term average P/E, with a current price 7% higher than where it should be with a historically average P/E in more than two years carries too high of a value risk for how I analyze purchases. When that stock is forecast to grow earnings by only single-digit percentages over the next two years, that coupled with the current low yield indicates to me that the income stream I will be purchasing is not the best use of capital I can make. If MCD had a current yield like T, or was forecasting 25% annualized growth, my opinion would certainly change.

T and MCD don’t belong in the same sentence. How dare you lol. T has way too much debt and is at the sane price it was 5 years ago. It has 6% yield for a reason. Everyone has there own opinion. It’s what  makes a market. For every seller there’s a buyer. MCD has had a lot of funds buy in recently even above $220. So while some say it’s over valued, others see opportunity 

I wish I bought AMZN and NFLX 5 years ago when they were over valued. Heck they don’t even have a PE lol.

Haha. T may not be the best example, but people who bought recently in the 20s probably are pretty happy with their imaginary paper gains. The yield back then, though! Debt is always concerning, and credit rating is absolutely one of my purchase/value criteria (I prefer BBB+ or better)

I have a lot of overvalued holdings at the moment that I’m not adding to. LMT, TGT, and VFC immediately come to mind. I’ll definitely buy more if they ever get cheaper, but the bear market right now mostly appears to be in Industrials, agribiz, community banks, and materials. Stocks like ADM, CAT (avoided for a long time, started a position today), NUE, CTBI, CFR, and a couple others appear to be where the value is right now. Prices are better when the headlines are doom and gloom. If the world stops needing steel, mass-produced food/feedstock, industrial equipment, and banks that invest locally, we’ll all have bigger problems than where the S&P is at.