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Why Warren Buffett buying Amazon stock means traditional value investing is dead
Why Warren Buffett buying Amazon stock means traditional value investing is dead
agree ? disagree ?
lets hear it from you...............kc chong? any other ( former) value investors?
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1 person likes this. Showing 15 of 15 comments
you always think you are a step ahead of KC. you tell me la. i will use my brain to filter then.
2019-05-06 21:56
(2.6m shares buyback April ) Philip
It's not new. Warren buffet has been doing this for a long time, like I said many times before, ALL investing is based on some form of value. In the end price is what you pay, value is what you get. If you are willing to pay a certain amount today to get big benefits in the future, then it is good.
There are pe50 companies, and there are pe50 COMPANIES.
2019-05-06 22:55
all those value investing tools, no need one.
just focus on buying quality stuffs good enough for the masses.
quality stuffs are stuffs people like to be associated with., good enough already.
2019-05-06 23:01
Not really dead. Buffett never discloses how he precisely selects stocks, so he might be using the same method he used. Or even if he deviated from what he used to do, it is still value investing. The idea of value investing is always to buy stocks below the intrinsic/apparent value. Buffett probably thought Amazon to be undervalued now, could grow further in future & probably has a very strong sustainable competitive moat.
From what I see, Buffett is now acquiring shares of strongest companies, eg Apple, Amazon. Perhaps, he wants Berkshire to be the monopoly holder of strongest stocks for the next 50 years.
2019-05-07 01:28
Value investing is buying all future cash flows, discounted to present value, at a discount/margin of safety.
This means, one of this fund mangers, believes amazon will be making a ton more money in the future with a high level of confidence.
That's it.
2019-05-07 01:53
(2.6m shares buyback April ) Philip
This is not it. That concept is inaccurate and pretty much IMPOSSIBLE TO ESTIMATE as a reliable method of investing. 5 years of good returns does not project 10-15 years of cash flow returns. You cannot box in investing into one simple mental model. In fact, I said it before many times, ALL investing is VALUE investing. But now that Warren says it, buying pe50 companies ( with monopolistic characteristics) suddenly makes sense.
The most simplified way of looking at Berkshire investment is using these basic mental models:
1. The only assured, GUARANTEED way for shares prices to go up in the long term is with rising revenues, rising earnings fueled by controllable debt.
2. The easiest way to identify companies with competitive advantage is to first look to the market industry leaders and benchmark them against everyone else. A simple moat (like location, brand, management, cash pile) can go a long long way.
3. The idea behind paying up for wonderful companies versus paying cheap for average companies is based on the concept of risk. The first 10years of Amazon is growth fueled by high risk high reward. Now that they have built a dominant position in the market, that risk is getting lower and lower. Understand Risk first and foremost before investing.
4. Cash flows needs to have context. Matured companies will have better can flows than start ups. But just like a mirage in a desert, if you don't understand CONTEXT, you will not understand VALUE.
5. Everyone seems to want to look for the next Google, next Amazon, next Apple at it's infancy. But for every Google out there you will find a pets.com. history has shown buying quality works. If you had bought s&p 500 over the last 20 years and reinvested your returns, even without knowing a thing about stock picking you would have done well. In Malaysia, even if you knew next to nothing about investing, if you had just bought a basket of stocks around the most solid industry in Malaysia ( banks) if you had reinvested and continued investing in the market leaders (rhb, Hong leong, public, Maybank, cimb, bank Islam) over a long period 10-15 years you would have done well.
Buy quality, it works.
Investing doesn't have to be hard. You host need to be consistent, patient and concentrated.
>>>>>>>>
Posted by Choivo Capital > May 7, 2019 1:53 AM | Report Abuse
Value investing is buying all future cash flows, discounted to present value, at a discount/margin of safety.
This means, one of this fund mangers, believes amazon will be making a ton more money in the future with a high level of confidence.
That's it.
2019-05-07 08:13
osted by Choivo Capital > May 7, 2019 1:53 AM | Report Abuse
That's it.
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u didn't get it while Philips gets it.
2019-05-07 15:49
Buy good quality, investment grade companies. - PUNTER IB
2019-05-07 16:08
Why isn't anyone discussing about this? This should be an interesting topic. Don't tell me 99% of i3 members are day traders who rely solely on technical analysis?
2019-05-09 23:55
OMG.
I try to make it simple.
Amazon is investing heavily into the future, deduct that from the account, Amazon is making HUGE profit.
2019-05-10 00:05
Amazon is slowly turning into the monopoly for all industries with its tremendous EOS. I guess that's what the investment is based off..
2019-05-12 20:10
Quote from Warren Buffett himself
"The decision to buy Amazon’s stock was just as much based on value investing principles as a decision to buy a statistically cheap stock. Value investing is about estimating and valuing future cash flows, not about how low a Price to Book or a Price to Earnings ratio is for a stock.
You can pay too much for a wonderful business. There is a price where we could have paid too much for See’s Candies and it wouldn’t have worked out well as an investment. You can turn any investment into a bad deal by paying too much. What you can’t do is turn any investment into a good deal by paying a cheap price."
2019-05-16 16:40
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not dead. only the method of evaluation is evolved. primitive era, the strength of hunter is evaluated. industry 1.0, land size is evaluated. industry 2.0, factory efficiency is evaluated. industry 4.0, addiction of mass to your platform and how you turn it to profit is evaluated. there is not defined template to do this evaluation. that is the mystery, drastic fluctuation of the IT commpany share price is the result.
2019-05-06 21:19