Newsletter - January 18th, 2024

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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Templeton: CNBC Interview (2002)

This was a time of elevated stock prices despite the dot-com crash and the aftermath of the Enron (2001) accounting scandal (and just before the WorldCom accounting fraud was discovered).

There's some repetition in the video - some notes below:

2:30 Value

Forget trying to predict short-term market trends, and focus on value - price relative to earnings, dividends, growth, etc.

4:30 News intensity

The intensity of the news cycle can influence people's decisions. Probably best not to let it impact your buy/sell decisions.

8:15 Little value in technology stocks (despite the crash)

Templeton would be interested at 6x earnings rather than 37x earnings.

11:00 Market calls

Rare bad market call by Templeton. The market kept rising for another six years. Probably best to stay fully invested in undervalued stocks throughout. (see 20:15)

11:45 Diversify

Templeton advises not to have more than 50% in any one country or industry - because humility is important in investing.

20:15 The long run

Stocks would be the best way to invest but that doesn't preclude large interim declines.

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Wish you an excellent week ahead.