10 replies to this topic

[VolPivots]

Bonds should rocket higher in short order.....

[A-ha]

I receive over 10 market comments from different institutions on daily basis... Most of them were bullish on Oil before the open today....Some of them are crazy about Oil Services because they think they are cheap...you know P/E stuff...The worst kind of stocks are usually those with low P/Es. For example NBR is one of them ... down about %15 in 3 weeks with P/E of 8.... They must be really in love with it now There is only one way to make money. Not their way, or my way but your way.

Edited by xD&Cox, 03 January 2007 - 11:47 PM.

[VolPivots]

I receive over 10 market comments from different institutions on daily basis... Most of them were bullish on Oil before the open today....Some of them are crazy about Oil Services because they think they are cheap...you know P/E stuff...The worst kind of stocks are usually those with low P/Es. For example NBR is one of them ... down about %15 in 3 weeks with P/E of 8.... They must be really in love with it now

There is only one way to make money. Not their way, or my way but your way.

Low P/Es beget lower P/Es...or at least that's what the chart suggests

http://stockcharts.com/c-sc/sc?s=$BPENER&p=D&yr=1&mn=6&dy=0&i=p25931438316&a=80411367&r=1296.png

[dcengr]

All things I read tell me that GS is bearish on the market and trying to tank it.. In mid december they put out their semi report, and it tanked the semis and Qs.. Their high profile hedge fund is short US equities and down 10% for the year, and they use quantitative analysis.. Now this.. GS is one of the best trading houses around, and likely it will go their way.. but I think they're a bit early here.

[OEXCHAOS]

I receive over 10 market comments from different institutions on daily basis... Most of them were bullish on Oil before the open today....Some of them are crazy about Oil Services because they think they are cheap...you know P/E stuff...The worst kind of stocks are usually those with low P/Es. For example NBR is one of them ... down about %15 in 3 weeks with P/E of 8.... They must be really in love with it now
There is only one way to make money. Not their way, or my way but your way.

My father, back when he was a pup broker, had a meeting in NYC with Carl Loeb ( Loeb, Rhoades ). Mr. Loeb politely asked my father what he liked and why, and Dad--enthusiastically said that he liked GM because it's P/E was so low.

"My boy," Mr. Loeb said in his wonderful east coast patrician accent, "Beware the low multiplier of high earnings!"

Of course, anyone who's watched GM or others over the years knows that the P/E collapses prior to the stock tanking. Those earnings are history and they almost always go away, often with the nice fat dividend, too.

Dad never forgot that lesson and it was one of the first one's he taught me after I came back LMWW training bubbling about the virtues of low P/E "Value Investing".

Mark

[A-ha]

I receive over 10 market comments from different institutions on daily basis... Most of them were bullish on Oil before the open today....Some of them are crazy about Oil Services because they think they are cheap...you know P/E stuff...The worst kind of stocks are usually those with low P/Es. For example NBR is one of them ... down about %15 in 3 weeks with P/E of 8.... They must be really in love with it now
There is only one way to make money. Not their way, or my way but your way.

My father, back when he was a pup broker, had a meeting in NYC with Carl Loeb ( Loeb, Rhoades ). Mr. Loeb politely asked my father what he liked and why, and Dad--enthusiastically said that he liked GM because it's P/E was so low.

"My boy," Mr. Loeb said in his wonderful east coast patrician accent, "Beware the low multiplier of high earnings!"

Of course, anyone who's watched GM or others over the years knows that the P/E collapses prior to the stock tanking. Those earnings are history and they almost always go away, often with the nice fat dividend, too.

Dad never forgot that lesson and it was one of the first one's he taught me after I came back LMWW training bubbling about the virtues of low P/E "Value Investing".

Mark

If I had someone to tell me some of those things in my earliest before I experimentally find out... That would make the things a lot easier

Edited by xD&Cox, 04 January 2007 - 11:07 AM.

[maineman]

Just because a stock has a low PE does not mean its a "value". Value investing is the most profitable form of wealth accumulation there is (ever heard of Warren Buffet, for example?) I am comfortable today because I invested in VALUE stocks over time. Unfortunately VALUE investing takes a ton of work and due diligence, and it also takes time and patience. SOmething most amateur investors lack. They always want the "hot" tip, the latest thing, etc. For a very illuminating look at this, I suggest ANY article by David Dreman (of Forbes magazine). If you really want to learn, read his book. WHile you're at it, take a look at his track record. mm

[OEXCHAOS]

Just because a stock has a low PE does not mean its a "value". Value investing is the most profitable form of wealth accumulation there is (ever heard of Warren Buffet, for example?)

I am comfortable today because I invested in VALUE stocks over time. Unfortunately VALUE investing takes a ton of work and due diligence, and it also takes time and patience. SOmething most amateur investors lack. They always want the "hot" tip, the latest thing, etc.

For a very illuminating look at this, I suggest ANY article by David Dreman (of Forbes magazine). If you really want to learn, read his book. WHile you're at it, take a look at his track record.

mm

I hope you don't think that I poo-poo value investing. I don't. In fact, I use it and run a modified discipline for clients.

We're up over 15% for 2006 and up over 143% since we started running this discipline. This is an aggregate of all our Value Investment Portfolio accounts, net of fees and commissions. That's also sitting on a good deal of cash much of the time.

But my point was that P/E alone isn't enough to determine value. In fact, many good values have very high P/E's and some great shorts have low P/E's.

Mark

[IndexTrader]

Did you guys miss all those studies showing that low PE stocks as a group outperform high PE stocks over time? Perhaps what you're saying is that buying a cyclical stock with peak earnings and therefore low PE isn't the best strategy. IT

[maineman]

"But my point was that P/E alone isn't enough to determine value. In fact, many good values have very high P/E's and some great shorts have low P/E's."

Agreed!

mm