Old School Value Nugget Fest (Feb 6th Edition)

Written by

Jae Jun

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My how quickly the market can change.

Something we forgot about the market – that it also goes down.

January’s peak was something like 7.7%, but it has come back down this past week with the S&P500 down to -0.9% on the year. Not exactly what I call a correction. More like a dip.

Whether the market is dropping 5% or 20%, my strategy remains the same. I’m going to be in investing for I hope the next 60 years, and because I’ll be in it for at least half a century, I’ll be buying and selling businesses.

Unless the world comes to an end, buying quality+value+growth companies is going to stay as my game plan.

I don’t know at what angle the market chart line is going to keep marching on, but I view these drops as buying opportunities more than anything. Oh there’s still the effects of the of the 2008 crisis lingering around in the form of interest rates and the fed continuing to play their games.

Look at the forest and I’m betting on Buffett when he says that the US market will be higher in 10 years time.

Don’t forget 2016.

January 2016 started -10% but ended the year at something like 20%. It goes to show how futile our attempts are at predicting market movements. Market pundits are just as worse – if not worse.

Headlines continually lie and make you think stock prices are EVERYTHING. A 5% dip is earth-shattering.

Compare this to the new car you drive off the lot.


But nobody gets a heart attack over throwing away 20% on their car.

“Price is what you pay. Value is what you get.”

I have next to me a box of misc stuff I no longer use that I uncovered while moving homes last year. There’s a mint condition Nikon lens that actually went up in price since my original purchase.

But because I want it gone, I posted it on Craigslist for a discounted price. My craigslist price does not determine the value of the lens. It’s merely a transactional price.

Graham introduced Mr Market, and he’s doing the same thing. Wake me up when he’s willing to throw in some freebies into the mix because I have a long list of companies I want thrown in to sweeten the deal.

Old School Value Articles You May Have Missed

What We’re Reading in the Media

The most hated bull market of all time?

It’s about time somebody didn’t took a realistic look at the market.

The author points out that most of the EPS growth has been driven by stock buybacks and investors, traders, market makers reward the Fed for anything and everything. He also uses the DuPont ratio (which you can use for free at OSV for some companies) to look at the make up of the S&P500 and see that asset turnover is dropping while financial leverage is increasing with the use of cheap debt. But is that a bad thing?

I don’t want to summarize and give the whole thing away. Read it for yourself.

How Amazon Rattles Other Companies

I’ve got to admit that I’m a fanboy of Amazon. Before it was AAPL fanboy this, AAPL fanboy that, and talking about the AAPL ecosystem. But Amazon’s ecosystem blows AAPL out of the water.

My wife’s business is also a fast growing seller on Amazon, so knowing more about the companies gives me an edge when competing against other sellers to see and piggyback what Amazon is doing before other sellers catch on.

How Apple did last year according to a panel of experts

If you own Apple shares, here’s a detailed breakdown, survey and report of their product lineups from the view of consumers.

Other reads:

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