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Newsletter - October 27th, 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:



1988 Buffett Interview

Notes on an old Adam Smith interview (not the 1985 original):

4:45 Stick to Ben Graham's Principles

"Everyone that I personally know that has really stuck with the Ben Graham principles over 20 years or more has done appreciably better than the market." (see last point)

7:00 Print the stock coupons

Just like bond coupons, the job of a common stock analyst/investor is to print future coupons from the business in his mind.

We rely on large quantitative margins of safety in demonstrated performance (which works for lending/bond investing) - and carefully consider adverse qualitative factors - to tide us through future vicissitudes.

7:45 Sensational businesses given away

Occasionally, sensational businesses are available at a fraction of business value. Buffett bought the Washington Post for $80mn when analysts then would've pegged its business value at $400mn.

With good businesses, you only have to get the buy decision right. (And you only have to get rich once.)

Though our focus is on the extent of businesses undervaluation (even of mediocre businesses), we emphasize business quality in our rating process.

10:15 Why doesn't everybody do it?

Because this business requires patience.

10:45 Just be right on the business ...

... And the market will take care of itself.

We will do our best appraising investment value.

12:45 Lessons from 400 years of financial history

"You ought to conduct your affairs so that if the most extraordinary events happen, you're still around to play the next day"

Best not to borrow money to buy stocks.

14:15 Silly prices

It's not the form of security (even if it's a derivative) - but the price that matters for investment results.

19:45 Temperament

Adopting the temperamental set of buying value, requiring a margin of safety, and detachment from the market - is most important.


Peace until next time.


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