Most investors know and accept the back - testing that shows excess returns
from buying cheap stocks (low price / book or price / earnings).
Having cash on hand allowed my church to buy a building cheaply in March 2009, and allowed me to help rescue a friends business, as well
as buy some cheap stocks.
Value - investing, which we loosely define as any strategy that
buys the cheapest stocks in the market, works because investors overreact to poor performance and project it too far in the future (aka, LSV 1994 Journal of Finance).
Outlier years like 1999, and 2011 will occur occasionally, but, on average, you're better
served buying Cheap stocks, and remaining cautious during periods when the median stock in the market offers a historically low yield, like right now.
But for now, I stick to the simplicity
of buying cheap stocks (with the occasional compounder) and selling them as they reach fair value.
Robert Robotti: When I started my business in the early 1980s my original focus because I'm an accountant was
on buying cheap stocks relative to companies» balance sheets.
«People watching it expecting to learn how to
buy cheap stocks will be disappointed,» Buffett told the New York Times.
«People watching it expecting to learn how to
buy cheap stocks will be disappointed,» Mr. Buffett said with a chuckle during a telephone interview.
His mantra was always «
buy cheap stocks».
Investors who pay up for stocks in the more expensive quintiles appear to be getting short - changed; they receive less in earnings and returns with similar growth rates as
those buying cheaper stocks.
It's difficult to buy stocks at new lows, and it's difficult to
buy cheap stocks, as they usually have some sort of short term problem.
I've tried these things in the past, and for me, I've found it much easier to be simple... I try to
buy cheap stocks, preferably ones with higher quality.
This is despite the fact that, as early as 1965 and while working under Graham, Buffett was becoming aware that the latter's strategy of
buying cheap stocks (what Graham called «cigar - butts», or companies selling for less than their net working capital) was not ideal, for it did not consider the quality of businesses, and just a stock's cheapness.
If I could briefly summarize Schloss investment career, it would be:
Buy cheap stocks, make 20 % per year, sleep well at night, enjoy life.
You may never find a better time to
buy cheap stocks (on a P / E basis) in cyclicals, energy, materials, technology, and financials.
Buying cheap stocks (on an earnings basis) has been out of favor for the last few years.
You buy cheap stocks, but only after their prices have rebounded.
The conclusion was that since analysts were wrong and no better than random, it was just better to
buy cheap stocks.
Everyone tells you that they want to
buy cheap stocks.
But I will ignore earnings if I feel it is time to
buy a cheap stock.
He uses market volatility as an opportunity to
buy cheap stocks.
As others have said it is a good time to
buy some cheap stock!
I think that the market is maybe slightly overvalued relative to earnings and assets, but this doesn't mean that there aren't opportunities to
buy cheap stocks.