The Next Big Crash - Are You Prepared?

[Ben]

When we do an analysis, and if we change the date to 3 years ago, does it remain the same? If so, why not buy 3 years later? Besides fundamentals, there has to be catalysts for rerating on either the asset layer, business layer or the structure layer.

Yes it makes sense. However, most of the time we only know on hindsight. There are stocks I bought in the past, at deeply discounted value but still remained deeply discounted years after. Catalysts are important and needed for a stock to revalue, something I now ask myself before I buy.

Fundamentals are not on hindside. It takes effort to study the company but ANYONE with a basic accounting or business understanding can do it. That's why I have heavy worded comments on Eratat and Blumont, and some others.

Catalysts on the other hand is more real time. You need to know and understand the newsflows before it even becomes numbers. That separates finance people with accounting people. Investors are concern mostly about the future, but history is good guiding post.

That's why for people that don't have time or interest, I always suggest index funds. I wouldn't spend effort trying to figure out the medical profession either, or how to cut my hair. Active investing is not for everyone.

This is an area that I am paying more attention on. Numbers don’t lie, but numbers alone is not good enough to predict the future. Take for example Asia Enterprise, a company I invested since 2007. This company has an unbroken track record of profitability since inception. It has a solid BS with high cash and little debts, plus a track record of paying at least 40% of profit as dividends. However, I am not able to see the coming collapse of steel price that beset the company for the next few years. Till now, it is still trading at lower price that my buy price, fortunately, it remains profitable every year and continue to pay dividends every year.

Yes, indeed finance person is different from accounting person. Thanks.

[tau281290]

LMAO at number 19. It really is cheaper than last time purchased. VERY rational.

[InvestArk]

Sorry to pop your bubble guys but shouldn't we as value investors focus more on the underlying value of the business and buy them up when an acceptable margin of safety presents itself rather than trying to time the market ?

what do you define as a acceptable margin of safety?

i think whether we like it or not, value investors end up "timing" the market, in terms of trying to buy "low" (low p/e, low p/b, net-nets) and sell high (huge p/e, crazy p/b, etc).

i think they don't set out to catch the top or buy in the bottom per se but buy low and sell high ends up being the way it works.

The level of Margin of safety largely depends on each individual analysis / risk appetite. Timing the market refers to trying to catch the lowest point of the dip/ when the crisis is in its full blown stage or selling out at the highest . I totally agree that the bread and butter of value investors is to buy a dollar at a faction of the cost ( buy low sell high) but how can anyone predict when is the lowest or the highest when the world greatest investor warren buffet could not. Hope this clarifies

[wahkao]

This is an area that I am paying more attention on. Numbers don’t lie, but numbers alone is not good enough to predict the future.

yes, agreed on that, Numbers alone is not good enough to predict the future.

What can we use to compliment the numbers so that we can get a more accurate picture of the future?

[felixleong]

“Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.”
Source: Letter to shareholders, 2004 - Warren Buffett

[cif5000]

Timing the market refers to trying to catch the lowest point of the dip/ when the crisis is in its full blown stage or selling out at the highest . I totally agree that the bread and butter of value investors is to buy a dollar at a faction of the cost ( buy low sell high) but how can anyone predict when is the lowest or the highest when the world greatest investor warren buffet could not. Hope this clarifies

I don't think your definition is correct. Market timing is more on the trend and the direction of price movement rather that picking the top/bottom.

Which value investor doesn't know how to spot a value stock? This has to be my favourite line:

Besides fundamentals, there has to be catalysts for rerating on either the asset layer, business layer or the structure layer.

[Temperament]

Quote:Which value investor doesn't know how to spot a value stock? This has to be my favourite line:

i have similar idea too. No one can be smarter than the Market.
If anyone can spot a value stock, but for how long?
The market usually knows it way ahead of you.
By the time you find it, it has not much IV left.
Maybe WB and people like him know it first before all of us (aka a bit too late already). NO?

[BlueKelah]

Quote:Which value investor doesn't know how to spot a value stock? This has to be my favourite line:

i have similar idea too. No one can be smarter than the Market.
If anyone can spot a value stock, but for how long?
The market usually knows it way ahead of you.
By the time you find it, it has not much IV left.
Maybe WB and people like him know it first before all of us (aka a bit too late already). NO?

market can know things ahead of us but may not respond accordingly and also may not be able to respond if the stock is small-cap and funds cannot come in.

So as value investor, we can "strike" when the news is bad but the underlying fundamentals is still strong and undervalued

[Wildreamz]

This is an area that I am paying more attention on. Numbers don’t lie, but numbers alone is not good enough to predict the future.

yes, agreed on that, Numbers alone is not good enough to predict the future.

What can we use to compliment the numbers so that we can get a more accurate picture of the future?

Common sense, SWOT analysis:
1. Strengths: characteristics of the business or project that give it an advantage over others.
2. Weaknesses: characteristics that place the business or project at a disadvantage relative to others
3. Opportunities: elements that the project could exploit to its advantage
4. Threats: elements in the environment that could cause trouble for the business or project

[Temperament]

Quote:Which value investor doesn't know how to spot a value stock? This has to be my favourite line:

i have similar idea too. No one can be smarter than the Market.
If anyone can spot a value stock, but for how long?
The market usually knows it way ahead of you.
By the time you find it, it has not much IV left.
Maybe WB and people like him know it first before all of us (aka a bit too late already). NO?

market can know things ahead of us but may not respond accordingly and also may not be able to respond if the stock is small-cap and funds cannot come in.

So as value investor, we can "strike" when the news is bad but the underlying fundamentals is still strong and undervalued

Ah........small cap--- specialists & Venture capitalists & ????