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Where on earth is the value investor to go ?
Old 04-11-2005, 09:49 AM   #1
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Where on earth is the value investor to go ?

I've always tried to buy stuff undervalued and "out-of-favor", hold for a long time, and sell when vogue (or hold forever).

Are there any asset classes and/or any regions undervalued today ?

US stocks - generally overvalued now.
US real estate - fully valued (at the least).
Bonds are no party now.
Oil/natural resources - overpriced

Is there any value out there ? International ? Emerging market debt ? International real estate ?

Maybe it's me, everything seems "near a bubble".

Yet substantial cash positions trying to keep pace with inflation at best is "no way to go through life"....

However, maybe there is a reason Buffet is sitting on $30 B in cash...

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Re: Where on earth is the value investor to go ?
Old 04-11-2005, 10:16 AM   #2
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Re: Where on earth is the value investor to go ?

Buy land young man. "They ain't making any more."

BTW, maybe Buffet has heard the one about "spend your credit! Cash is good any time."

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Re: Where on earth is the value investor to go ?
Old 04-11-2005, 10:48 AM   #3
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Re: Where on earth is the value investor to go ?

I don't know that anything is cheap today, but maybe some things are less expensive than others.

This year, I've bought large cap growth/blend globally, including Japan (VPL/VPACX) and VUG (US growth).

My cash is at an all time high of 5%, partly because I also can't find a cheap asset class.

On a simplistic P/B and P/E basis, Korea seems cheap... but it also seemed cheap in 1997 before the EM crash. MAKOX has ER of about 1.3% or there's an ishare for Korea, but ER is high for an index.
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Re: Where on earth is the value investor to go ?
Old 04-11-2005, 12:35 PM   #4
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Re: Where on earth is the value investor to go ?

Maybe cash IS the only "cheap" asset class right now...

Interest rates are improving and will reward cash holders if they continue to climb. The former bull market in U.S. equities taught everyone that holding cash was a bad idea. Now that most investors chant this in their sleep the opposite may well be true.

Maybe cash+patience = better opportunities ahead when stocks go on sale? NASDAQ has tasted RTM (sort of), and the S&P may yet take a turn.
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Re: Where on earth is the value investor to go ?
Old 04-11-2005, 01:31 PM   #5
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Re: Where on earth is the value investor to go ?

Cash and foreign bonds are doing well (both hedged and unhedged)...foreign bonds beat US bonds and the S&P as of late but that is not a reco to buy
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Re: Where on earth is the value investor to go ?
Old 04-11-2005, 04:20 PM   #6
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Re: Where on earth is the value investor to go ?

I've heard some mention that U.S. large-cap and small-cap growth are reasonably valued, but I'm not biting. While others are heading towards TIPS for asylum since inflation is peaking out from behind its rock. Anywhere in Europe or Asia?

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Re: Where on earth is the value investor to go ?
Old 04-11-2005, 05:38 PM   #7
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Re: Where on earth is the value investor to go ?

Quote:
On a simplistic P/B and P/E basis, Korea seems cheap... but it also seemed cheap in 1997 before the EM crash. *MAKOX has ER of about 1.3% or there's an ishare for Korea, but ER is high for an index.
Do you have any good websites for valuations for markets of different countries ?

Seems to me that PE's, in order of highest to lowest: US, Europe, Asia, Emerging Markets.

Thanks !
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Re: Where on earth is the value investor to go ?
Old 04-11-2005, 08:42 PM   #8
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Re: Where on earth is the value investor to go ?

Best I know is MSCI, see quote below.

Otherwise:
You can look at M* data for funds, but the data quality is just horrible. See VEIEX valuation for an example, even the print version at your local library, the P/E is under 2.

You can look at Vanguard's data for their indexes. On their website. (VPACX,VEIEX,etc)

Yahoo has an ETF page with valuation data, though a little old. It might be a different version of M* data than on M*'s site. Korea ishare is on the list, for example.
http://finance.yahoo.com/etf/browser...cs=1&ce=20&o=a

There's S&P data, not sure of the quality: http://www.globalindices.standardand...ntal?index=BMI
(thanks to peteyperson for that link)

Quote:
(lazyday at Raddr's board) I have been worried about comparing valuation metrics across countries. Sometimes it can actually be in your favor: I think there has been some talk of earnings being understated in other countries than US because of taxes. If I understand correctly, in US, you aren't taxed on the "earnings" that shows up in P/E and may be inflated, but on the earnings shown on the tax forms, which would probably be minimized. Unlike in some other countries, or so I've read.

I also might have once read that BV in Japan is either comparable to US or even conservative in general, but am really very fuzzy on that. If anyone has info/links either way, would be nice.

In the case of the Vanguard Pacific index, some of the larger companies also trade in the US, and would then have to also report to US standards, I believe.

If you live in a very big city or near a well-funded business school, see if you have access to Morgan Stanley Capital International Perspective. I no longer do. Each month it would publish valuation data for many countries, and go through some effort to make the numbers comparable. One of the issues they adjusted for was differing sector weights. For example, the Australia market had lots of natural resources stocks, a sector which had low valuations at the time. They adjusted for this, to make the comparison to a different country more valid. I don't recall what they did to make P/B and P/E numbers as "apples to apples" as possible, if anything.

I really wish I still could get the monthly page or two which showed valuations around the world. If someone with access were willing to mail me the 2 pages a few times a year, I'd love to return the favor somehow! I used to get it from a library in New York City, but where I live now, it isn't available anywhere, according to the reference librarians. I assume it still exists...

Of course, valuation isn't the only consideration; different countries may have different growth rates, and currencies may be over or undervalued. There also could be varying levels of stability vs. risk that things won't go as nicely in the future as they have lately. And varying levels of corruption and protection for shareholders.

....

I just looked into this again, and the name has changed. And, it is nowhere in my entire state.

Title: MSCI blue book. Developed markets.
Alternate title: Morgan Stanley Capital International blue book.
Publisher: New York, NY : Morgan Stanley Capital International, c2001-

It's both monthly and quarterly under the same title. The quarterly version has ISSN: 1535-5578

If you live in New York, you should have access, that's where I used to get it.
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Re: Where on earth is the value investor to go ?
Old 04-11-2005, 08:45 PM   #9
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Re: Where on earth is the value investor to go ?

There's also a Red Book for emerging markets, but it is even harder to get hold of.
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Re: Where on earth is the value investor to go ?
Old 04-11-2005, 09:28 PM   #10
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Re: Where on earth is the value investor to go ?

There is ALWAYS value to be found. Investing is like finding grubs for fishing. Turn over a rock, you'll find a grub. Turn over a lot of rocks and you'll find lots of grubs. That was Peter Lynch's philosophy. I don't think we're overvalued in the stock market. People will always find a reason not to buy stocks, because the investor is a fickle person when it comes to risk and he likes to find a reason to justify opting out of it.
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Re: Where on earth is the value investor to go ?
Old 04-12-2005, 08:51 AM   #11
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Re: Where on earth is the value investor to go ?

"aggrevation"? Looks to me like what you "need"
is remedial spelling

JG
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Re: Where on earth is the value investor to go ?
Old 04-12-2005, 09:59 AM   #12
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Re: Where on earth is the value investor to go ?

You might look into precious metals for a portion (5%-10%) of your portfolio. While it is true that they have gone up in the past two years, they still may have a ways to go. Gold is up from around $300 to the mid $400s and silver has gone roughly from $5 to $7 per ounce. One other thing to consider is the historical ratio between an ounce of silver and an ounce of gold. If memory serves me correctly, the ratio has historically been around 15:1. Currently it is over 60:1, which tells me silver MAY be undervalued in relation to gold.

PMs have been a historical store of value throughout recorded human history, but as with anything else, it is very possible to get burned investing in them.
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Re: Where on earth is the value investor to go ?
Old 04-12-2005, 05:30 PM   #13
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Re: Where on earth is the value investor to go ?

Hate to be the bearer of bad news but Bill Gross at Pimco has a pretty good analysis this month, worth reading....

http://www.pimco.com/LeftNav/Late+Br...April+2005.htm

Cogent quotes.....
"The fact is that this real interest rate journey to its current destination has pumped up all asset prices because they are all being discounted by an extremely low real interest rate. The current level has produced double-digit annual rates of appreciation for different asset classes at varying cycles; stocks and bonds first;commodities, collectibles and housing with a lag. The important point and critical element in a future forecast, however, is to recognize that real yields, whether they be short-term or further out the curve, bottomed in 2003 and have been moving higher ever since. Not only has the downward journey ended, but a mini up-cycle appears to be underway which ultimately reduces bond prices, stock P/Es and casts a negative pall on other asset classes."

.... "Since the PIMCO forecast is for real yields to stay low, absent a policy mistake by the Fed, we may well whimper along rather slowly as all asset classes compress to provide 2-3 percent real and 5+ percent nominal returns over long periods of time."
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Re: Where on earth is the value investor to go ?
Old 04-12-2005, 05:55 PM   #14
 
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Re: Where on earth is the value investor to go ?

Quote:
we may well whimper along rather slowly as all asset classes compress to provide 2-3 percent real and 5+ percent nominal returns over long periods of time."
2-3 percent works just fine for all of us that aren't too greedy and plan on dying some day. 8)
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Re: Where on earth is the value investor to go ?
Old 04-12-2005, 06:05 PM   #15
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Re: Where on earth is the value investor to go ?

Quote:
Hate to be the bearer of bad news but Bill Gross at Pimco has a pretty good analysis this month, worth reading....
I'm going to ignore ol' blathering Bill until he comes through on his promise of Dow 5000.
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Re: Where on earth is the value investor to go ?
Old 04-12-2005, 08:35 PM   #16
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Re: Where on earth is the value investor to go ?

Give it time Nords, give it time. We of the somewhat bearish tendencies are sometimes right...eventually...

I mean, wheres that Dow 36,000 guy now? Hmmm??
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Re: Where on earth is the value investor to go ?
Old 04-12-2005, 09:43 PM   #17
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Re: Where on earth is the value investor to go ?

Quote:
Yahoo has an ETF page with valuation data
Yahoo updated the page.
Their data seems suspect too. Note the Biotech P/B of 2.05 on the bottom of this page: http://finance.yahoo.com/etf/browser...=a&cs=21&ce=40

Ishares puts it at 6.78: http://www.ishares.com/fund_info/det...ml;?symbol=IBB

There's different ways to get one P/B number for a fund, but that seems extreme. Note that Yahoo has SPY (500 index) at P/B of 2.78, supposedly more expensive than biotech.

Note that ishares own website doesn't provide valuation data for thier Foreign funds. Maybe there's a reason for that...
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Re: Where on earth is the value investor to go ?
Old 04-13-2005, 04:38 AM   #18
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Re: Where on earth is the value investor to go ?

Lazyday - thanks for info.

Any good newsgroups/boards for ETFs and/or international stocks ?

You're really at 5% cash ?

Thanks..
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Re: Where on earth is the value investor to go ?
Old 04-13-2005, 08:50 AM   #19
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Re: Where on earth is the value investor to go ?

There's some ETF discussion at http://www.diehards.org/ and the early retirement boards, including http://www.nofeeboards.com/viewforum.php?f=1 and http://www.raddr-pages.com/forums/viewforum.php?f=2
Maybe others know of more good boards.

Yeah, I'm at 5% cash (actually, very short term bonds and ibonds). But that might just be an indication of how little I know about asset allocation.
Also, I'm 15% in PCRIX, commodity futures which in the past has had negative correlation to equity, so that might make up for a low cash position. But commodities and stocks still might go down at the same time--perhaps in case of a recession in China, for example.

Before this year, I've never had a cash position, except when I was waiting to save up enough to buy something before I had a margin account. (Also had cash before I ever started investing.) Usually have aimed for about a zero balance--no cash, small or no margin loan.
Late last year I woke up and noticed the things I owned and had thought were relatively cheap didn't seem so anymore. And, for the first time, I couldn't find something else which really seemed cheap. I read of others much smarter than me who felt the same way, including John Templeton, Warren Buffet, and some value mutual fund managers. I also lowered my risk tolerance at the same time, from outrageously high to very high.

So, for me a 5% cash position is actually high. And a new thing. At first it felt strange to hold cash, but that went away quickly. I might even double it if my portfolio breaks through its previous high anytime soon. (Don't want too much cash though, I think it becomes dangerous market timing if hold more cash than comfortable holding for the long term.)

I've started to read Gibson's Asset Allocation, and have requested Bernstein's Intelligent Asset Allocator from library. Maybe they will change my opinions on cash.
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Re: Where on earth is the value investor to go ?
Old 04-13-2005, 11:13 AM   #20
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Re: Where on earth is the value investor to go ?

Thanks for links.

I'm at 50% in "fixed income"/cash right now - the bulk of it in my 401K "Fixed Income" fund - which is returning 5.5% - I believe it is made up of GIC (guaranteed investment contracts ?). Rest in money markets.

30% is international equities, 20% domestic stocks.

And I can't sleep at night now....

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