Hey all,
In response to GG99,
I think your missing the point. For sure non value investors use P/B and P/E, let them and let them lose money. But both are price related which doesn't equate to what value investors look at for value. We shouldn't give a hoot what a low ROE businesses price related equations tell because we wouldn't be looking at those businesses. For high ROE businesses, sure I 'glance at P/B where Roger doesn't but it true what he says that it is a fairly obsolete ratio. If they had to sell their assets they would be in liquidation and the asset values in their books wouldn't be anywhere close to the sell off prices. And a high ROE business is going to be returning rates far in advance of the book values. The P/B doesn't tell value investors anything they want to know as I see it.
Thanks guys - I'll have a hunt around and see if I can find anything else.
I have seen the ave. annual P/E on Commsec. I also noticed that they have a similar thing for dividend yield now as well.
They're both helpful in a sense, but the graph that craft posted is the main thing that I am after.
gees roger rated JBH as A3, flashing lights net debt 134% flashing lights , if people want a black box skaffold is not one, who in their right mind would invest in retail now?????????
Actual iv 8.53 forecast 17.86 ,,,, ha ha still laughing ha ha hahahha
That's amusing because six months prior to that he listed it as one of five stocks that he would confidently buy and hold if the market were to close for five years tomorrow. Another one of those five was MCE.Roger's been warning about JBH for ages, its A3 anyway so its off my radar. But for anyone who still thinks JBH is Rogers darling, sorry that was a while back, he sold out at $15.50.
DTL -88%
That's amusing because six months prior to that he listed it as one of five stocks that he would confidently buy and hold if the market were to close for five years tomorrow. Another one of those five was MCE.
I would argue that he reacted to the market twice: once in buying and twice in selling. In both cases his valuation formula forecast growth to infinity. Do you know how his formulae works and the assumptions it makes?The market isn't static, at the time the news was all good but it changed and he reacted.
A better question is: was his appraisal and / or assumptions used in that appraisal correct in the first place? Many here would argue no and the market and Roger have belatedly agreed with them.Should he have held on because in the past it looked like a good stock?
There is no answer to the question of what IRR to use that will fit all circumstances.Btw guys any thoughts about investors required return (IRR) ?
I would argue that he reacted to the market twice: once in buying and twice in selling. In both cases his valuation formula forecast growth to infinity. Do you know how his formulae works and the assumptions it makes?
A better question is: was his appraisal and / or assumptions used in that appraisal correct in the first place? Many here would argue no and the market and Roger have belatedly agreed with them.
Have a look around in both the JBH and MCE threads and read some commentary from other sources before and around the time he made that video. There were plenty of detractors saying the same things that are only now common knowledge.
There is no answer to the question of what IRR to use that will fit all circumstances.
In most cases, I will use a range of IRR / discount rate values for each valuation I attempt. Having a range of NPVs is often better than trying to find a perfect solution where none exists. Always be as conservative as possible.
Btw guys any thoughts about investors required return (IRR) ?
I been thinking about it a lot. I have a mathematics/economics background so the immediate temptation is to use historical data to sift out some kind of risk premium.
But in consideration, thats illogical. When coming up with a risk value for the IV calc, an assessment of the risks needs to be forward looking.
The problem here being we're trying to turn qualitative concepts into quantative information. Whatever result I get I know its not going to be precise, luckily it doesn't have to be. But getting it approximately right is still easier said than done.
Try flicking the IRR within the IV calc and you'll see how sensitive the IV is for even a little change, i.e. 0.10 to 0.11 can wipe a huge amount off of the IV.
You of course don't want your IRR to be too high as you may miss out on opportunities but the IRR can't be too low either for risk of getting in too soon or asking too high or a price when selling.
My solution so far is to understand the business model of the stock, I can then understand each risk and assign a rough value to each. The value has to reflect how sensitive the future profits of the business are to each individual risk.
Any thoughts?
Sorry, I think you misunderstood. I will calculate a range of valuations to see what possibilities are inherent in my assumptions. It gives me a feel for different perspectives. It also allows me to compare the impact of the discount rate on the end result. I wouldn't use these prices as my actual buy targets like you have suggested above. Although, the idea of averaging into a stock, rather deploying all of your capital at once is a good idea as long as it is done with relation to the valuation that you feel most accurately reflects the reality of the stock's prospects.Thats a pretty sweet idea, like if you want 10,000 shares, and
Price 1>Price 2>Price 3
Buy 5000 at Price 1
Buy 3000 at Price 2
Buy 2000 at Price 3.
Any cash that doesn't get used can be left in an 30 day account and wait for other opporunities.
I got something more to think about
There are too many inconsistencies and black holes to RM for my liking.
- ditto - when RM says with strong conviction that P/E is not appropriate to value a company when in fact his "ROE/RoR x Equity per share" is of course P/E restated - do the math. That he gets away with this beats me.
Just curious.
Has Roger gone quiet? Or adopting a different business approach?
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