3 ms·

Those of us who care about silly, antiquated things like P/E ratios, or even having earnings at all, have definitely consistently underperformed the market. Va

by caeril 6y ago

Those of us who care about silly, antiquated things like P/E ratios, or even having earnings at all, have definitely consistently underperformed the market. Value investing is a widowmaker in the ZIRP era.

erulabs 6y ago
Value investing is quite interesting, but when trying to come up with "value" picks, I wind up finding out about companies I'd never heard of in my life before. I do a tiny bit of this. Mostly, I invest in companies whose products I'd love to buy. I buy Apple gear, I bought a Tesla, I buy stuff on Amazon all the time and I love CloudFlare. Simply following the products I'd like to buy in the future and ignoring P/E ratios and ignoring the screams of much more experienced investors (who all hated TSLA because "they lose so much money!") has worked out gang-busters. I find it hard to square the "value investing" concept with the idea of following my own product instincts. What publicly traded company has products people DESPERATELY want, but fails to make profits eventually? Are there... any? That's a death only start-ups who don't know enough VCs ever face these days. There is close to unlimited liquid cash in the world - but there are very very few interesting products.
- im3w1l 6y ago
  Numbers matter a lot, but you are right that P/E ratio is way simplistic. I think if you want to quantify your strategy, you should look at which market the company is in, and how much of it their amazing products can capture, and how soon. How big market share in % will Tesla's headstart in EV and autopilot give them in 10 years? That's the kind of question you should ask.
tfehring 6y ago
Isn't outperformance by assets with greater duration - e.g., stock in companies whose expected earnings are way off in the future - what fundamentals would suggest should happen in a decreasing interest rate environment?

by caeril 6y ago

erulabs 6y ago

Value investing is quite interesting, but when trying to come up with "value" picks, I wind up finding out about companies I'd never heard of in my life before. I do a tiny bit of this. Mostly, I invest in companies whose products I'd love to buy. I buy Apple gear, I bought a Tesla, I buy stuff on Amazon all the time and I love CloudFlare. Simply following the products I'd like to buy in the future and ignoring P/E ratios and ignoring the screams of much more experienced investors (who all hated TSLA because "they lose so much money!") has worked out gang-busters. I find it hard to square the "value investing" concept with the idea of following my own product instincts. What publicly traded company has products people DESPERATELY want, but fails to make profits eventually? Are there... any? That's a death only start-ups who don't know enough VCs ever face these days. There is close to unlimited liquid cash in the world - but there are very very few interesting products.

im3w1l 6y ago
Numbers matter a lot, but you are right that P/E ratio is way simplistic. I think if you want to quantify your strategy, you should look at which market the company is in, and how much of it their amazing products can capture, and how soon. How big market share in % will Tesla's headstart in EV and autopilot give them in 10 years? That's the kind of question you should ask.

tfehring 6y ago

Isn't outperformance by assets with greater duration - e.g., stock in companies whose expected earnings are way off in the future - what fundamentals would suggest should happen in a decreasing interest rate environment?