When market drops, like what it did in the past two months, many investors gave up, sat on the sideline, or even the doomsday parade.
Value investing holds that market volatility does not destroy value, rather it create opportunity. Value investors should take advantage of market declines like what we just experienced in the past two months, work even harder to look for bargains, and deploy the capital that was saved for days like these.
Wonder what some of the other value investors are doing? an article in WSJ presents an inspiring story:
Read the full story here
Value investing holds that market volatility does not destroy value, rather it create opportunity. Value investors should take advantage of market declines like what we just experienced in the past two months, work even harder to look for bargains, and deploy the capital that was saved for days like these.
Wonder what some of the other value investors are doing? an article in WSJ presents an inspiring story:
Art connoisseur Scott Black is annoyed. Demand from investors in emerging markets has been inflating prices for the Impressionist paintings he likes to acquire. Fortunately for his clients, the value investor and money manager sees plenty of bargains in the stock market.
Whether it is the art market or the stock market, Mr. Black, founder and chief investment officer of Delphi Management, sails through boom-and-bust cycles by adhering to investment principles made famous by Benjamin Graham and Warren Buffett. The key is to pick stocks with earnings growth, strong cash flow and low price/earnings multiples.
“Right now, the market is fundamentally cheap,” Mr. Black said. “The problem is the fear factor is overwhelming the fundamentals. … I’m not a harbinger of doom [but] I’m not Pollyanna, either.”
Case in point: The Standard & Poor’s 500 is trading at about 13 to 14 times earnings even though companies’ earnings are up 30% year over year.
“That’s terrific—we are not getting a V-shaped [recovery] in [gross domestic product], but we are getting a V-shaped recovery in earnings,” Mr. Black said. Plus, he said, while emerging-market growth may slow a bit, China and India are still growing at a rapid rate.
Read the full story here
