Newsletter - December 16th, 2023

Dear Reader,

Attached is our latest list of stocks passing value screens (low EV/ebit, high returns on invested capital, etc.), which don’t meet our investment criteria - and our reasoning.

This may help you avoid some ‘value traps’, and stocks that aren’t sufficiently attractive compared to opportunities available today.

For reports of stocks that pass our quantitative and qualitative standards:

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Sir John Templeton

Nuggets of wisdom from a couple of interviews:

0:30 Earning Power

The key ratio of value is price/earning power - as outside passive minority investors, this is our focus in the stocks we report on.

4:30 Stock Allocation

"Never less than 50% in stocks on a worldwide basis."

If you've got enough ideas (and smaller investors generally do - we'll work to bring you the best we find), there's a good case to be fully invested and stick to it over your lifetime - keep it simple like Walter Schloss.

Or keep enough in cash reserves to stay sane when the market crashes.

5:15 Maximum Pessimism

"Buy wherever the public is most urgently trying to sell" - that's the only factor that makes share prices go down.

These are precisely the areas we hunt to find undervalued stocks.

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0:15 Blessed times

Rumors of wars notwithstanding, these are bountiful times when the public can own shares of productive enterprises - unlike most of human history.

1:45 Graham and Dodd

Investing is most intelligent when it's most businesslike. When you focus only on growth and ignore value received, you're on shaky ground.

We concentrate on obtaining as much value in established earning power as we can get.

3:00 Dow Jones at 1,000,000

His prediction sounds incredible - but it required only a 5% compounding rate from 11,000 (at the time of the interview).

Get compounding to work for you starting now and reap the rewards:

Join Here

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Wish you an excellent week ahead.