The Value Perspective is an extensive resource for providing information on 'value investing' in equities. Value investing is a proven, long-term approach which focuses on exploiting swings in stockmarket sentiment, targeting companies which are valued at less than their true worth and waiting for a correction. We aim to share the thoughts, opinions and passions of five experts in this field, along with independent commentators, providing greater insight into this often poorly understood area of equity investing.
18 Dec 2014
Regular visitors to The Value Perspective will be aware that one of our preferred metrics is something called the Graham & Dodd price/earnings (P/E) ratio. Rather than referring to a single year’s profit number, this longer-term P/E ratio uses an average of 10 years’ profits to try and smooth out the inevitable peaks and troughs of the economic cycle.
16 Dec 2014
“The company’s combination of steep valuation and vulnerable finances have conspired to make the first half of 2014 a time to forget for its shareholders.” That is how we concluded an article back in May on former market darling Serco’s fall from grace – and investors in the troubled services business are unlikely to remember the second half of the year with any great fondness either.
12 Dec 2014
During the Second World War, the US Air Force asked statistician Abraham Wald for his thoughts on protecting their bombers from enemy fire. Weight considerations limited how much armoured plating could be used and the consensus view thus far was to reinforce the wings, central fuselage and tail – after all, the planes had been returning from missions with those areas riddled with bullet holes.
9 Dec 2014
Why would anybody want to be a value investor? It is a difficult, grim and – almost by definition – lonely existence. Take a glamorous area of investing such as personal computers and where are the value investors? Are we piling into Arm Holdings because tablets are growing exponentially? No, we are buying the undervalued manufacturers of hard-drives and printers, which tablets barely use.
5 Dec 2014
On The Value Perspective we like to quote from a film once in a while and what better one to quote than Forrest Gump.
"Lieutenant Dan got me invested in some kind of fruit company. So then I got a call from him, saying we don’t have to worry about money no more. And I said, that's good – one less thing."
The spectacular investment returns enjoyed by Forrest Gump and his friend Lieutenant Dan on the back of their investment in the nascent Apple Computers at the start of the 1980s came to mind as we enjoyed an excellent piece by Barry Ritholtz in The Washington Post, The world’s greatest stockpicker? Bet you sold Apple and Google a long time ago.
2 Dec 2014
The world today is a worrying, uncertain and risky place. There is geopolitical risk and macroeconomic uncertainty while the media is awash with worrying stories about anything from stagnant wage inflation to the Ebola virus. People are nervous and investors are cautious, which has set financial markets working overtime to meet an increased demand for products that are seen as ‘lower-risk’.
28 Nov 2014
For something so integral to investment, liquidity – the ease (or otherwise) with which an asset can be bought or sold – is extraordinarily hard to quantify. Assorted academics have attempted to create a suitable metric for it but have struggled to improve on the less than precise idea that liquidity is an intangible trade-off between the certainty of executing a deal and the price at which it is executed.
27 Nov 2014
If you were to ask a certain type of investor what it is they are thankful for this Thanksgiving, their reply might well include the phrase “US high-dividend stocks”. Indeed a number of our own clients have been asking us why we do not own – as they do – huge amounts of ‘Incredible Income Inc.’ or whatever it might be, on account of its 8% yield and stated intention to grow it further.
26 Nov 2014
‘Active’ is a curious adjective in investment. Depending on your views on what the press has got into the habit of characterising as the ‘active versus passive debate’, for example, it can be seen as either a positive or a negative. In the phrase ‘active share’, though, it tends to be thought of less ambiguously as a good thing while, to stretch our theme a little, the opposite is true of trading actively – as in often.
21 Nov 2014
Whenever a high-profile fund manager leaves their job, the chances are it will provoke a flurry of media comment on whether investors would do better to stick with the fund or follow the manager – or, as The Clash might put it, should you stay or should you go? So it has proved after an eventful few weeks of managerial comings and goings that included the exit of ‘Bond King’ Bill Gross from Pimco.