1. Value investing typically means the purchase of stocks having a low ratio of
price to book value, a low price-earnings ratio, or a high dividend yield.
2. However, these characteristics, or their combination, cannot accurately determine whether an investor is indeed buying something for what it is worth and is therefore truly operating on the principle of obtaining value in his investments.
3. Similarly, opposite characteristics – a high ratio of price to book value, a high price-earnings ratio, and a low dividend yield – are in no way inconsistent with a “value” purchase.
4. Firstly, the original “bargain” price may not turn out to be such a bargain.
5. Secondly, any initial advantage you secure will be quickly eroded by the low return that the business may earn.
6. If you are in an abysmal business for a long time, you will get a miserable result even if you buy it cheap.
7. If you are in a first-rate business for a long time, even if you pay a little bit more when entering you will get a marvelous result if you remain for a longer time.
8. It is better to invest in magnificent businesses – even if you pay a little more for it – rather than buying a company only for its cheap valuations.
2. However, these characteristics, or their combination, cannot accurately determine whether an investor is indeed buying something for what it is worth and is therefore truly operating on the principle of obtaining value in his investments.
3. Similarly, opposite characteristics – a high ratio of price to book value, a high price-earnings ratio, and a low dividend yield – are in no way inconsistent with a “value” purchase.
4. Firstly, the original “bargain” price may not turn out to be such a bargain.
5. Secondly, any initial advantage you secure will be quickly eroded by the low return that the business may earn.
6. If you are in an abysmal business for a long time, you will get a miserable result even if you buy it cheap.
7. If you are in a first-rate business for a long time, even if you pay a little bit more when entering you will get a marvelous result if you remain for a longer time.
8. It is better to invest in magnificent businesses – even if you pay a little more for it – rather than buying a company only for its cheap valuations.
9. Book
value is virtually not a consideration in investment decision-making.
10. The pursuit of high return businesses usually leads to companies with minimal book values.
11. Unless you are a liquidator, that kind of approach to buying businesses is foolish.
12. In a difficult business, no sooner is one problem solved than another surfaces.
13. Really wonderful businesses need no book value.
10. The pursuit of high return businesses usually leads to companies with minimal book values.
11. Unless you are a liquidator, that kind of approach to buying businesses is foolish.
12. In a difficult business, no sooner is one problem solved than another surfaces.
13. Really wonderful businesses need no book value.