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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More Templeton Wisdom
Notes below:
1:45 Principles
Use common sense - avoid fancy formulas, and fixed concepts.
Get the most value for your $ - be a bargain buyer. Buy stocks selling at low prices to what you think the corporations are worth.
2:45 Global diversification
Get more bargains, better bargains, and reduce risk.
Just as it's wise to diversify across industries, diversify across countries (though it's best to stick with countries that protect minority shareholders).
3:45 Keep improving
The methods used for security analysis must improve constantly - keep learning, keep improving.
6:30 Growth component
The investor must give credit to the growth component of a company - though he should try to obtain it as cheaply as possible.
12:30 Unloved stocks
The right time to buy shares is when most people don't want them - this means there will be problems. The real question is to appraise whether the pessimism has gone too far - and prices of securities have fallen considerably below their value to a private owner.
13:45 Stay invested
One benefit of staying fully invested through your lifetime is to capture all the gains that accrue to stock investors. If you know you're going to do well over 20+ years staying invested, why fool around by dancing in and out of the market.
14:15 Shortage of shares
Repurchases of stock is a significant positive for share price appreciation - particularly in stocks selling at bargain prices.
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For reports on stocks that we think sell for considerably less than their value to a private owner:
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