ringledman
Registered User
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Very Interesting question and well timed!!
We are actually considering running a seminar on this very subject in Dublin and would be interested in assessing the demand out there.
If you are interested in learing more about value investing please private message me with your personal e mail address and if there is sufficient demand, we will run a seminar for askaboutmoney members.
Evidence from practising investors and academics alike points to an undeniable conclusion: returns are related to risk.
Gain is rarely accomplished without taking a chance, but not all risk-taking is rewarded. Financial economics over the last fifty years has brought us to a powerful understanding of the risks that are generally rewarded and the risks that are not.
Market Shares have higher expected returns than fixed interest.
Size Small company shares have higher expected returns than large company shares.
Price Lower-priced "value" shares have higher expected returns than higher-priced "growth" shares.
Everything we have learned about expected returns in the equity markets can be summarised in this way:
Firstly,stocks are riskier than bonds and have greater expected long-term returns.
Relative performance among stocks is largely driven by the two factors:
small cap vs large cap and value vs growth.
Many economists believe small cap and value stocks outperform over the long term because the market rationally discounts their prices to reflect underlying risk. The lower prices give investors greater upside as compensation for bearing this risk.
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Hi,
Any Value Investors out there? Anyone live by the rules of Graham and Buffet?
I really believe that this is the best approach to investing in the markets particularly the way the economies are going.
Can anyone provide any advise on the subject? Any courses on investing and in particular value investing run in Dublin?
Cheers.
Don't forget to Google "value trap"
Marc,
Growth stocks are the way to make money in the equities market. With all due respect the value investing argument is the way brokers off load stocks that nobody wants to the gullible public. O'Neill's books and many other studies have illustrated this.
But if you are running a course and want me to come along a give a talk (no charge) on how the pro's trade the markets I would be happy to do so.
Lemur,
I would gladly accept your offer.
We seem to represent alternate sides of this debate so we could have a lively presentation around passive investing vs trading and speculating or Growth vs Value investing which would make it all the more interesting.
Maybe we should ask Eddie Hobbs or George Lee to moderate?
Marc,
Growth stocks are the way to make money in the equities market. With all due respect the value investing argument is the way brokers off load stocks that nobody wants to the gullible public. O'Neill's books and many other studies have illustrated this.
But if you are running a course and want me to come along a give a talk (no charge) on how the pro's trade the markets I would be happy to do so.
Lemur,
Share your thoughts with us then regarding the greatness of growth shares.
Most are too highly priced to be investments or represent 'new technology' that never makes investors long term money...railways, air companies, tech stocks in the 90's and probably alternative energy stocks now.
Ringledman - this is an old argument with lots of studies on it. Your second statement is to general to be meaningful.
Pick up a copy of O'Neill's book on CANSILM investing to grasp some of the concepts and take it from there.
From a value point of view the only stocks I would consider are high div paying ones such as the Canadian energy trusts.
Hardly a convincing argument. Growth stocks will get hit hard in this downturn. Lack of investors and falling earnings across the board.
Growth stocks are great in the good times, terrible in the bad.
Value is the only way forward to minimise the downside in the current climate which is the number 1 rule.
Growth and value returns oscilate depending upon the economy. Value is the way forward now.
The idea is you ride growth stocks up and take profits. You don't ride them down.
So we agree, growth stocks will be a terrible investment over the next 5 years of economic woes.
5 years is too long a timeframe for me. Who knows where the market will be in 5 years. Admittedly, its not looking good
ringledman....i am a value investor and contrarian at heart. I am an avid reader and follower of buffett, munger, dreman, bolton and a number of other very well known value investors.
value investors represent about 5% of the investing population, which suits me just fine.
all i can say to you is read, read, read and continue reading. This is what buffett and munger do the whole time. The internet is an immense wealth of information- search search search.
Read all the berkshire hathaway annual reports and read and study the value investors bible- the intelligent investor by ben graham.
read as many value investing related books you can get your hands on and you will do very well.
Thanks Smiley i couldn't agree more. The intelligent investor blows you away with its rational, contrarian approach. To follow the crowd screws you in investing, I have been there.
Value investing is in my opinion is the route for the long term investor. Growth fads come and go. Value companies that produce the basic boring products and services at the same time producing good earnings beat the 20-35 P/E growth stocks every time. Buy them and forget about them for the long term.
Whats your thoughts on the 'cigar butt', 'worth more dead' approach of Graham? What's the situation for the investor if they do go bust?
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