Can Turtles Fly?

Right now, DJIA has a P/E of 16.8 and forwand P/E of 15.1, whereas S&P 500 is at 20.1 with forward P/E of 15.8. Source: WSJ market Data If you ignore interest rates and inflation expectations--both of these influence valuations but depends on your macro call-- the market is not cheap. Long-term P/E is around 15. Trailing P/E is around 20% (Dow) to 40% (S&P500) higher than average. Forward P/E is in line with long term average but that assumes a strong V recovery. Consensus forecast is for profits to drop 1.2% in 2020. In 2008, it dropped 25.4% so current forecast is a very mild recession. Covid-19 coronavirus is not going to last more than a few months but these forecasts are still too rosy in my opinion. So I wouldn't rely on forward P/E. The richly valued (mostly tech or high quality) have not fallen much but the distressed ones have. So if you want to outperform in the long run, I think one’s choice right now is to: • Wait for market to fall another, say...

Now that we have entered a bear market, I'm following it more. I'm tweeting more nowadays. I'll still post long articles or investment evaluations here. For quick thoughts and articles I reference, follow my tweets at username @sivaram_v . QR code below.

Have always been a big fan of Louis Vincent  and ran across this good interview with theMarket.Ch (thanks to Jesse Felder for bringing this to my attention). Below are some responses I found worth quoting. There is a lot more discussed and I recommend that you read the whole interview. Q: What's ailing the automotive sector?   Louis Vincent Gave: There are a number of structural issues, but the most significant development has been the realization that the Chinese car market is done growing. For years, the Chinese market has been growing by two to three million cars per year. Financial markets have just extrapolated this kind of growth into the future. But that turned out to be wrong. The Chinese car market has probably hit its limit at 25 to 30 million units per year. In most parts of the world, the auto sector has stopped growing. It’s no surprise then that Germany has seen such a collapse lately.  ... You mentioned that in every bubble there is the belief ...

I will try to write up my evaluation when I get time but here are intial thoughts: cheap stock in highly competitive market micro cap insiders and prominent investor ( David Webb) owns huge stake no moat vulnerable somewhat to US-China trade war (20% sales and 25% profit from USA, China slowdown) good long term growth from China tourism growth strong balance sheet high dividend  Purchase price (HK:3828): HK$0.81

Not sure if timing is right--world economy slowing, China-US trade war likely to get worse, etc--but decided to take a position in two Hong Kong microcaps. You can find low P/E stocks in HK and unlike Japan, where you can also find low valuation , capital allocation is better (many actually pay out dividends instead of sitting on cash) and try to grow (may Japanese companies are facing deflation and population shrinkage). However, fraud risk is higher is HK compared to Japan. I will try to write up my evaluation when I get time but here are intial thoughts: out of view micro cap rolling up in big fragmented industry insiders and reputable investor (David webb) own big stake low tax (Bermuda and HK have no witholding tax) competitive industry no moat low growth but potential for China growth if they decide to enter market strong balance sheet high dividend  Purchase price (HK: 1127): HK$1.18

Haven't had time to spend too much time on investing but I do keep up with news and research things here and there. With the American market selloff in Q4 2018, I have been investigating several stocks. As usual in these corrections, the lower quality stocks have sold off more. I notice that leveraged businesses are somewhat cheap right now. As an example, a lot of John Malone's companies have sold off quite a bit (some of it due to company/industry  specific issues but market selloff amplified it). For example, Liberty Global (LBTYA, LBTYK) and Liberty Latin America (LILA, LILAK) have fallen a bit. They have lots of debt and the is concern over the future of the cable industry but they are getting cheap. In the meantime, in early January, the Nevsun (NSU) takover was completed (on Jan 4). Took a bit longer than forecast bute overall, satisfied with how things turned out. Price Sold: $6.00 Total Return: 4.88% (annualized (estimate): 23%--not meaningful) With a small po...

Thanks to Liberty for pointing me to this excellent interview with hedge fund superinvestor Stanley Druckenmiller, conducted by Real Vision. Druckenmiller is a macro investor so anyone who is macro- oriented should definitely check it out. As he makes clear in the interview, he made most of his money in interest rates and currencies and doesn't do much equity investing, so small investors like me who are focused on stocks won't find much practical insights. Nevertheless, you can glean some thoughts about global macro issues. Of note, the interview covers loose money policy over the last decade and potential trade war with China. In my opinion, these two are the most important issues, not just in the immediate future but also over the next 25 years. Druckenmiller also gives the most important investing lesson he learned: one should always know whether they are on a hot streak (doing well) or if they are on a cold streak (bad). You should realize what streak you are on and a...