Do low P/E ratios mean bargain buys?

I thought value investing is more about what we understand, rather than we don't understand. there is always something we can't understand, but it does not block the way of value investing on what we do understand.

(19-07-2011, 09:00 AM)Temperament Wrote: And the market seems to accept this stock also?

Because not everyone in the market is an investor. Some are traders, some are speculators. Some are puesdo-investors. Even among investors, some believe in Growth, some believe in value, some fall somewhere in between.

Investing is about self-discovery too. Those that constantly go for high ROE but debt laden stocks may produce spectacular returns but do they tout the other side of the coin when things don't go their way? It may be attractive but could you live investing that way?

Conversely, Value investing requires a lot of hard work and patience. Even then, things don't always go your way. Some people just can't sit on their hands while waiting for Value to be realised (if it ever gets realised) and end up trading.

You gotta experiment and explore what works for you- that gives you adequate returns and allows you to sleep well too.

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(19-07-2011, 10:12 AM)freedom Wrote: I thought value investing is more about what we understand, rather than we don't understand. there is always something we can't understand, but it does not block the way of value investing on what we do understand.

That's true.

Hmm....
So basically when we have doubts of a company, don't invest.
We invest to the level of our understanding or capability.
And of course, invest only even when the market crash, we can still sleep at night.
But this is where a person's temperament is very important.
They say some people are just not suitable to invest in the markets.
i wonder how much truth is in this belief?
How often we come across such people?

Are people who like to buy high and sell higher fall into this belief?
And when the market crash they will sell everything if there are buyers.
Buy High, Sell Low instead of Buy Low, Sell High.
Can they make money?

(19-07-2011, 11:05 AM)Temperament Wrote: Hmm....
So basically when we have doubts of a company, don't invest.
We invest to the level of our understanding or capability.
And of course, invest only even when the market crash, we can still sleep at night.
But this is where a person's temperament is very important.
They say some people are just not suitable to invest in the markets.
i wonder how much truth is in this belief?
How often we come across such people?

Are people who like to buy high and sell higher fall into this belief?
And when the market crash they will sell everything if there are buyers.
Buy High, Sell Low instead of Buy Low, Sell High.
Can they make money?

Each and everyone of us are unique in a way. What suitable for others is not necessarily suitable for us. We should all try to find a way to suit ourselves, rather than worrying about how other people earn/lose money.

(19-07-2011, 11:22 AM)freedom Wrote:

(19-07-2011, 11:05 AM)Temperament Wrote: Hmm....
So basically when we have doubts of a company, don't invest.
We invest to the level of our understanding or capability.
And of course, invest only even when the market crash, we can still sleep at night.
But this is where a person's temperament is very important.
They say some people are just not suitable to invest in the markets.
i wonder how much truth is in this belief?
How often we come across such people?

Are people who like to buy high and sell higher fall into this belief?
And when the market crash they will sell everything if there are buyers.
Buy High, Sell Low instead of Buy Low, Sell High.
Can they make money?

Each and everyone of us are unique in a way. What suitable for others is not necessarily suitable for us. We should all try to find a way to suit ourselves, rather than worrying about how other people earn/lose money.

Yes, of course, the number one or first thing to be a successful investor is self awareness. In fact in any matters, if you don't know who & what you are then nothing matters. You are already a "goner". Ha! Ha!

Extract from George C. Christy:-
FREE CASH FLOW - Seeing Through the Accounting Fog Machine to Find Great Stocks.

The GAAP CASH FLOW STATEMENT.

GAAP's Cash Flow Statement is a cash flow in name only. Yes, the Consolidated Statement of Cash Flows provides critical information not provided by the Income Statement such as the period's Depreciation expense and investment in new plant, equipment and other long-term assets (Capital Expenditures, or Capex). But the GAAP Statement of Cash Flows has several serious problems. GAAP allow companies substantial latitude in choosing into which of the Cash Flow Statement's three sections--Operating, Investing, or Financing--they put an item. An example: Some companies classify insurance reimbursements for fixed asset losses (resulting from a fire or flood, and so forth) in the Operating section rather than in the Investing section and some companies do the reverse. In 2005, some Fortune 500 companies were ordered by the SEC to reclassify the sale of their captive finance units' receivables from Investing section to the Operating section, thereby reducing "Cash provided from operating activities." Another example: If a company sells a division and receives a tax benefit from the sale, that tax benefit appears in the Operating section rather than in the investing section. Another example: A company that finances new equipment with a capital lease is not required to include the cost of the new equipment in either the capital expenditures line in the Investing section or in the Financing section. The amount must be disclosed in a footnote. The last example: So many public companies had been classified incorrectly, classifying cash flow from discontinued operations that the SEC in early 2006 was forced to allow companies to issued corrections that required no earnings' restatements. There are many, many more examples. The flexibility companies enjoy in deciding into which of the three CASH FLOW sections they put an items is one of GAAP's biggest failings.

The Author further described you have to Beware of The Balance Sheet, etc. and his humble advice: DO NOT MAKE INVESTMENT DECISIONS BASED ON A COMPANY's BALANCE SHEET or any item(s) therein other than CASH and Marketable Securities accounts.

I say, recently many companies form China, listed here and US, have been reported forging CASH Holdings and maybe Marketable Securities too. So, really what items cannot be smoked if they want to?

Investing is really very, very hard. Every items/data in accounting report can be manipulated. And by the time Market Professionals or Regulators spotted the manipulated company's account, it is already too late for you and me. Unless you can or know how to spot them like Professionals before everyone knows. Then, you may still recover some of your money or even profited from the market. Or you won't even considered buying this company at all in the first place.
So the characters of the management in a company should be considered first and how the company earns it's keeps (economic moat) before even wanting to look into it's books, which you can never be sure off it's accuracy or truthfulness.
Shalom to all investors.

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(23-06-2011, 05:27 PM)cif5000 Wrote:

(23-06-2011, 09:09 AM)d.o.g. Wrote: Unfortunately investing IS work. But few people want to acknowledge this. Even fewer want to do the work. But those who do, will reap the rewards.

And when the rewards are not really satisfactory, the easiest excuse is to *handicap* oneself by calling it a hobby!

Hi,
i have a different thinking or take. i have been investing for 23 years. Being not educated at all in a sense (only ITE 2 certified), i find it extremely difficult learning in the beginning. But i am DIY. type because of my practical technical training. At times, i hated it and thoughts of giving up came to my mind throughout my learning process. (To tell the truth, i am here because i am still in the learning process). But i know i got no future for retirement except learning to be a passive business man in the stock market. Therefore i prod on and on till i am here, now.
And only a few years ago, i realised investing in the market can be my lifetime hobby. This hobby will or shall keeps me from becoming a senile old man. i think i have found one of my life callings. A hobby is never a handicap unless you want to compare to a professional or expert. But in investing, any one who makes money is an "expert". Anyone who loses money is a "novice".
Ha! Ha!

(19-07-2011, 11:05 AM)Temperament Wrote: Hmm....
So basically when we have doubts of a company, don't invest.
We invest to the level of our understanding or capability.
And of course, invest only even when the market crash, we can still sleep at night.
But this is where a person's temperament is very important.
They say some people are just not suitable to invest in the markets.
i wonder how much truth is in this belief?
How often we come across such people?

Are people who like to buy high and sell higher fall into this belief?
And when the market crash they will sell everything if there are buyers.
Buy High, Sell Low instead of Buy Low, Sell High.
Can they make money?

Extracts from the book 'The Warren Buffett Way' by Robert G. Hagstrom, page 178,

THE TEMPERAMENTS OF A TRUE INVESTOR
The speculator tries to anticipate and profit from price changes; the investor seeks only to acquire companies at reasonable prices. The successful investor is often the person who has achieved a certain temperament - calm, patient, rational. Speculators have the opposite temperament: anxious, impatient, irrational. The worst enemy is not the stock market, but themselves.

I tend to agree with the above.

(22-07-2011, 03:21 PM)KopiKat Wrote:

(19-07-2011, 11:05 AM)Temperament Wrote: Hmm....
So basically when we have doubts of a company, don't invest.
We invest to the level of our understanding or capability.
And of course, invest only even when the market crash, we can still sleep at night.
But this is where a person's temperament is very important.
They say some people are just not suitable to invest in the markets.
i wonder how much truth is in this belief?
How often we come across such people?

Are people who like to buy high and sell higher fall into this belief?
And when the market crash they will sell everything if there are buyers.
Buy High, Sell Low instead of Buy Low, Sell High.
Can they make money?

Extracts from the book 'The Warren Buffett Way' by Robert G. Hagstrom, page 178,

THE TEMPERAMENTS OF A TRUE INVESTOR
The speculator tries to anticipate and profit from price changes; the investor seeks only to acquire companies at reasonable prices. The successful investor is often the person who has achieved a certain temperament - calm, patient, rational. Speculators have the opposite temperament: anxious, impatient, irrational. The worst enemy is not the stock market, but themselves.

I tend to agree with the above.

Ha! Ha!
I am really a very temperamental person.
When i was younger i am very short temper. i realise of course it is to my disadvantage. i really do. But i can be calm, patient and maybe rational too when the market crash. This is how i survive till today, in the market.
To let you know i am still very short temper but now with a tinge of aging mellowness like wine getting on in years.

(22-07-2011, 02:08 PM)Temperament Wrote:

(23-06-2011, 05:27 PM)cif5000 Wrote:

(23-06-2011, 09:09 AM)d.o.g. Wrote: Unfortunately investing IS work. But few people want to acknowledge this. Even fewer want to do the work. But those who do, will reap the rewards.

And when the rewards are not really satisfactory, the easiest excuse is to *handicap* oneself by calling it a hobby!

Hi,
i have a different thinking or take. i have been investing for 23 years. Being not educated at all in a sense (only ITE 2 certified), i find it extremely difficult learning in the beginning. But i am DIY. type because of my practical technical training. At times, i hated it and thoughts of giving up came to my mind throughout my learning process. (To tell the truth, i am here because i am still in the learning process). But i know i got no future for retirement except learning to be a passive business man in the stock market. Therefore i prod on and on till i am here, now.
And only a few years ago, i realised investing in the market can be my lifetime hobby. This hobby will or shall keeps me from becoming a senile old man. i think i have found one of my life callings. A hobby is never a handicap unless you want to compare to a professional or expert. But in investing, any one who makes money is an "expert". Anyone who loses money is a "novice".
Ha! Ha!

Let me try again.

Investment result can be satisfactory or unsatisfactory. It is usually the outcome of the effort you put in. (Agree that luck could play an even greater role.)

The game can have different names. For discussion sake, we call it either a job or a hobby. A job if one puts in a lot of effort and a hobby if it is done leisurely.

Here we get a matrix.

1. Good result - As a job
2. Good result - As a hobby
3. Poor result - As a job
4. Poor result - As a hobby

As I was told and I agreed, if one can achieve (2) he can have my envy.

(22-07-2011, 04:57 PM)cif5000 Wrote:

(22-07-2011, 02:08 PM)Temperament Wrote:

(23-06-2011, 05:27 PM)cif5000 Wrote:

(23-06-2011, 09:09 AM)d.o.g. Wrote: Unfortunately investing IS work. But few people want to acknowledge this. Even fewer want to do the work. But those who do, will reap the rewards.

And when the rewards are not really satisfactory, the easiest excuse is to *handicap* oneself by calling it a hobby!

Hi,
i have a different thinking or take. i have been investing for 23 years. Being not educated at all in a sense (only ITE 2 certified), i find it extremely difficult learning in the beginning. But i am DIY. type because of my practical technical training. At times, i hated it and thoughts of giving up came to my mind throughout my learning process. (To tell the truth, i am here because i am still in the learning process). But i know i got no future for retirement except learning to be a passive business man in the stock market. Therefore i prod on and on till i am here, now.
And only a few years ago, i realised investing in the market can be my lifetime hobby. This hobby will or shall keeps me from becoming a senile old man. i think i have found one of my life callings. A hobby is never a handicap unless you want to compare to a professional or expert. But in investing, any one who makes money is an "expert". Anyone who loses money is a "novice".
Ha! Ha!

Let me try again.

Investment result can be satisfactory or unsatisfactory. It is usually the outcome of the effort you put in. (Agree that luck could play an even greater role.)

The game can have different names. For discussion sake, we call it either a job or a hobby. A job if one puts in a lot of effort and a hobby if it is done leisurely.

Here we get a matrix.

1. Good result - As a job
2. Good result - As a hobby
3. Poor result - As a job
4. Poor result - As a hobby

As I was told and I agreed, if one can achieve (2) he can have my envy.

To make myself as clear as possible, i have been doing investment for so long (23 years) then suddenly a few years ago, i decided to make it a lifelong hobby for me. Now when we say something is our hobby, it's usually mean we enjoy doing it over and over again.
Well who knows, one day i may change my hobby. But it's most unlikely after getting so use to it-Win or LOSE a little in the market. i like it as a hobby because investing is never boring and you can never say you know everything already- there's nothing more to learn. i am a believer of lifetime learning. And you can do it with all types of investments. Most of them are beyond my liking or capability. Remember i only got an ITE education.
Ha! Ha!