Chumpmenudo

Value, growth, portfolio strategy, dividend growth investing
Chumpmenudo
Value, growth, portfolio strategy, dividend growth investing
Contributor since: 2012
Eli:
This a good write up, thank you! I don't think its tortoise vs. hare, its about the importance of valuation.
The message I take from this is simply this: don't overpay for any stock, no matter how wonderful you think it is! If you plan to hold for long, multi-year periods, buy only fairly or undervalued stocks!
Chump
Hello Chuck:
Really good article! Thank you for writing and posting.
Kind regards,
Chump
Hi Chowder:
I found your comment interesting. As a value investor, isn't it sometimes necessary to buy out of favor stocks, sometimes many in the same "category?" Industrials have been getting pretty cheap lately, so it seems natural that a value investor might add several industrials vs. some of the more overpriced names in other categories? Do you limit your holdings in each S&P category, regardless of valuation?
Best,
Chump
Rose, STAG is at the top of my list right now...unfortunately, Brad is about to expose our secret!
You had me at "overvaluation." I recently closed my position, and bought a different stock with a much better valuation.
But the second half of your title, "but don't sell" doesn't make sense. Why not? Yes, they are a great franchise, but the valuation is simply too high to hold. Even if they hit their projections the next couple of years, at a normal historical PE, the stock would have a negative annual return of over -2%.
Why hold and wait through several years of underperformance while the earnings grow into the price? As an investor, your margin of safety is much better with an undervalued stock.
Chump
Good read Brad, as always. I added Stag to the mix last week, great valuation of late, great yield.
Best,
Chump
Brad, thanks for all the great articles and advice the past 5 years! Merry Christmas!
Chump
Dave, great article! Thanks for researching and writing this. I was interested in the brief mention of Sharpe's ratio via Buffet. I've been studying this a bit recently, and am trying to learn more about its application to portfolio management, seems a more useful measure of excess returns due to picking vs. simply taking on more risk...perhaps a good subject for one of your future research projects?
Kind regards,
Chump
Reminds me of the Detroit Lions.....
Great read, thanks Chris.
Hi Bob, an interesting topic, thanks for writing the article. I was wondering the same thing early last year, how best to predict dividend growth rates? I went through David Fish's CCC lists and plotted dividend increases vs. other metrics looking for correlation. The two interesting conclusions I found were:
1. Dividend increases did NOT correlate well with EPS growth forecasts, and
2. The best predictor of the 1 and 3 year dividend growth rate is simply the most recent increase %, less a little.....
This link should take you to the analysis I conducted...(maybe)
http://bit.ly/1HzPgB6
Best,
Chump
We should ban spoons; damn things make me fat....
Jeff:
Intriguing topic, I look forward to the series! Thank you for your always excellent contributions.
Best,
Chump
Rich, forget the black swans, which are the growth stocks you mentioned earlier that can weather a market decline? ;-)
Chump
David:
Nice article, thank you for writing it! I wonder how many investors out there use the yield as their primary buy/sell metric without realizing, as your examples show, it's a decent/simple indicator of under and over valuation? Monitoring dividend growth and yield forces the investor to get a bunch of other stuff right too, whether they know it or not ;-)
Take care,
Chump
Hi Chuck, super article, thank you for writing it. I love the use of FG in the JNJ example. However, the example gives rise to lots of portfolio management questions....too many to bother you with here. Maybe just one....
Do you have portfolio rules that say things like "once the conservative projected ROR falls below 8%, sell and replace?" So, when JNJ projected eps growth falls off sufficiently, you replace it without hesitation?
thanks,
Chump
(Satisfied FG Premium subscriber since 2012!)
Thanks for the O update Brad...now own O, OHI, and recently DLR (all because of you! thanks)
Two questions:
1. When/if they raise interest rates soon, how big a hammering will these names take?
2. Have you ever written an article comparing physical ownership of a real estate to a comparable REIT portfolio? I'd be interested in seeing this.
Best,
Chump
Wow, that was a fun comment stream.
Thanks for writing RS,
Chump
Fun stuff Rich, thanks as always for your insightful comments! I added GE to a couple of portfolios in the past year. Why? Seems a good value below $25. I have some personal experience with the inner workings of GE, and what I've learned is this:
1. They attract great managers and leaders, and train them well. As evidence, just look at the number of former GE leaders who've gone on to become CEOs elsewhere. I found a study, though I can only read the summary: http://bit.ly/1BJ1aiO
The study looked at 39 companies with former GE leaders at the helm, vs. 39 similar companies without. The GE companies outperform
2. GE is an aggressive company, they push people hard, they weed out weak performers every year, and they strive to be #1 in every one of their businesses... the culture of performance at GE is relentless. I remember a big acquisition they executed...they looked at the revenue per employee of the target company, then promptly reduced the number of employees by around 35%. The leadership team of the target company came to the merger meetings in stretch limos, and showed up 15 minutes late...very few of these leaders survived the merger!
For these reasons, I like their odds of success in the future. They have too much talent not to be successful.
My $0.02
Chump
Dear Chuck:
Thanks for all you do! I've been a FASTGraphs subscriber now since 2012, and the tool just keeps improving. I love the latest enhancements, please keep up the great work.
Chump
P.S., it's really a pain to read all the comments following your articles, it takes me an hour! ;-)
Ha! I thought the same thing. I think he meant Cramer....
Thanks for the article Mike. I too own WMT in the IRA....time to consider an alternative. Some good suggestions in the comments...on my radar are:
UTX, ANTM, FAST
If you want more tech, I second CSCO, and would strongly consider IBM. Chump owns both....
This was a useful article, thought provoking as others have said. Thanks Eli.
Chump
Now that's an analogy! Thanks for the re-post Rich. Near the end, I was a bit nervous you were going to say the poop was edible ;-)
Chump
Rich, I like the "turn in the harness" analogy...I'm adding it to my others (symphony, football team & bench, etc...)
Chump
Darn. I Keep getting an error that says "Can't find project" when I insert the formula into a cell......
Any thoughts?
This is great Eddie, ML, thanks.
When I switched to a MAC some years ago, I realized MS Excel for Mac is inferior to the PC version. Automatic cell stock price updating was one of the casualties.....
I'll play with your suggestions tomorrow and see if I can get it back!
Chump
DGM:
Nice article, thanks for sharing...like others above, I'm super impressed by your savings rate...you could probably retire now given your fugal nature! ;-)
Chump
I'll do that, and I'll order some chowder ;-)
I live in San Diego, but haven't tried The Field. Thank's for tip guys.....
Chump
Nice interview Jeff, congratulations. However, you neglected to mention one important development....
Michigan's hiring of Jim Harbaugh! That should add a few basis points to U.S. economic growth this year, heh?
Go Blue!
Chump