This is a really good blog that follows a lot of small-cap deep value stocks. In this post he looks at some net cash stocks. I looked a lot of the ones he has been following or buying like GSIG and they've actually been in nice upward trends for months. I think there is probably some more downside in the overall market (maybe 3-5 handle DOW) but I'm thinking starting very soon net cash and net quick asset stocks are going to generate the same returns per year that they did in the 1930's in Ben Graham's portfolios.
I don't know what justification Obama has for telling the public to buy stocks but I don't think it is large-cap stocks that are going to be the best buys over the next few years. Large-Caps have never been the best buys for that matter. Check out this article on the top 10 performers from 1996 through 2005. Anyway, I think he just went on PE ratios which are misleading because to say a stock is cheap based on PE you have to have a reasonable forecast of future earnings. We are in a deepening recession so any forward looking estimates are merely guesswork. A PE of 5 seems cheap with past growth at 10% but if growth slows 5% and the multiple contracts so does the stock price to keep up with it. A PE ratio is just a part of analysis. You have to really be able to forecast a companies business into the future to consider it a good hold.
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I like this idea. I myself have been running a net net/liquidation value portfolio for a few months. You can check it out here for some ideas. I've got a larger list I compiled at the end of last year. Let me know if you'd like to collaborate on some research in this area.
yeah that's really neat. I was just re-reading about the 30s and apparently Graham's net's averaged 20 or 30% a year for about a decade. There were a couple other studies in that file I was reading. I'll post it on the blog soon.
I didn't see an email on your blog and I forgot my wordpress login. I'll leave a comment. My email is in the contact link on the right sidebar and in about at top of page.
Mark,
here is a question for you, which is unrelated to this post:
In my posting on the SHLD write up by Jeffrey Macke, the original article has been edited so that the points that I make are no longer relevant-as in, he changed his writing on Minyanville.com! I am trying to find someone that has a screen shot of the original article, or even knows of a way to access the article before the changes were made, so that I can do a "before and after" write up.
thanks in advance.