Comments on: Value Traps http://www.oldschoolvalue.com/blog/investing-perspective/value-traps/?source=rss Perform Stock Valuation Automatically Fri, 10 Feb 2012 19:29:58 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: adib http://www.oldschoolvalue.com/blog/investing-perspective/value-traps/comment-page-1/#comment-8098 adib Sun, 12 Jun 2011 00:39:24 +0000 http://www.oldschoolvalue.com/blog/?p=840#comment-8098 GreenBlatt's magic formula also looks at cheap as defined by EV/EBIT and quality as defined by Return on Invested Capital. I believe this is a good place to start. (not the only way by any means). It just depends on what your time horizon is. At some price, any business might be attractive..even one that is not growing... GreenBlatt’s magic formula also looks at cheap as defined by EV/EBIT and quality as defined by Return on Invested Capital. I believe this is a good place to start. (not the only way by any means).

It just depends on what your time horizon is. At some price, any business might be attractive..even one that is not growing…

]]> By: Jae Jun http://www.oldschoolvalue.com/blog/investing-perspective/value-traps/comment-page-1/#comment-1833 Jae Jun Mon, 23 Mar 2009 17:35:16 +0000 http://www.oldschoolvalue.com/blog/?p=840#comment-1833 That is exactly what Dreman says to look for in his book Contrarian Investment Strategies. (I just posted his 41 rules). Although the screen will filter out many companies, the unfortunate thing is that value traps will always be present even with a screen like that. That is exactly what Dreman says to look for in his book Contrarian Investment Strategies. (I just posted his 41 rules). Although the screen will filter out many companies, the unfortunate thing is that value traps will always be present even with a screen like that.

]]> By: EFN123 http://www.oldschoolvalue.com/blog/investing-perspective/value-traps/comment-page-1/#comment-1831 EFN123 Mon, 23 Mar 2009 13:21:31 +0000 http://www.oldschoolvalue.com/blog/?p=840#comment-1831 Is the simple solution to this to look for low P/E and/or P/B and/or P/CF and/or P/S combined with very high ROE and/or ROA? This significantly reduces the number of companies passing the screen but perhaps helps avoid the value trap? Is the simple solution to this to look for low P/E and/or P/B and/or P/CF and/or P/S combined with very high ROE and/or ROA? This significantly reduces the number of companies passing the screen but perhaps helps avoid the value trap?

]]> By: Jae Jun http://www.oldschoolvalue.com/blog/investing-perspective/value-traps/comment-page-1/#comment-1797 Jae Jun Thu, 19 Mar 2009 20:53:51 +0000 http://www.oldschoolvalue.com/blog/?p=840#comment-1797 @Nurseb911 When I first started out I was always looking for companies with low multiples but now I know better. @Jim I wish more people realised what it really meant before quoting that it has a low PE. @Nurseb911
When I first started out I was always looking for companies with low multiples but now I know better.

@Jim
I wish more people realised what it really meant before quoting that it has a low PE.

]]> By: Jim http://www.oldschoolvalue.com/blog/investing-perspective/value-traps/comment-page-1/#comment-1796 Jim Thu, 19 Mar 2009 18:45:41 +0000 http://www.oldschoolvalue.com/blog/?p=840#comment-1796 I have never used P/E when fixating a value to a business. I have never used P/E when fixating a value to a business.

]]> By: Nurseb911 http://www.oldschoolvalue.com/blog/investing-perspective/value-traps/comment-page-1/#comment-1794 Nurseb911 Thu, 19 Mar 2009 00:25:10 +0000 http://www.oldschoolvalue.com/blog/?p=840#comment-1794 I think a value-oriented investor needs to really be conscious of looking past what are considered "value metrics" by many of the greats: low P/E, P/B, etc I think that a value investor needs to be much more focused on the sustainability of the business model of a company more than what it's assets are worth on the books. Far too often stocks are cheaper than their assets because their ability to produce earnings (or earnings growth) is dramatically affected and don't have the resources or capacities to revive the business in a meaningful way to produce the return a value investor is anticipating. <abbr><em>Nurseb911’s last blog post..<a href="http://www.nurseb911.com/2009/03/fixed-income-alternatives.html" rel="nofollow">Fixed Income Alternatives:</a></abbr></em> I think a value-oriented investor needs to really be conscious of looking past what are considered “value metrics” by many of the greats: low P/E, P/B, etc

I think that a value investor needs to be much more focused on the sustainability of the business model of a company more than what it’s assets are worth on the books. Far too often stocks are cheaper than their assets because their ability to produce earnings (or earnings growth) is dramatically affected and don’t have the resources or capacities to revive the business in a meaningful way to produce the return a value investor is anticipating.

Nurseb911’s last blog post..Fixed Income Alternatives:

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