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Dimitry Nakhla | Babylon Capital®
RT @realroseceline: Imho there are small pockets of attractive price to value in the market, but overall the market still feels unattractive right now. People joke about Michael Burry when he says he does not understand the market, yet what he really means is that he cannot find value at prices that make sense. That is not unreasonable, it is common sense, and it takes real courage to step aside when you’re making a lot of money while everyone else is excited.
There are plenty of great businesses today with strong economics, real competitive advantages, talented management, and clean balance sheets. The issue is not the quality of these companies, the issue is the price you are being asked to pay. When you look at names like $NET, $PLTR, $CRWD, $SHOP, and others, the businesses might be excellent, but the valuations are stretched far beyond what the fundamentals can justify. Trees do not grow to the sky, and even perfect narratives eventually reconnect with reality.
When prices drift away from value, two outcomes usually show up, you either get a major drawdown of 50-80%, which we just saw with $DUOL, or the stock trades sideways for years while the fundamentals catch up. Neither outcome is unusual and both are simply the result of markets ignoring valuation for too long.
The emotional part is what makes this so difficult. People become attached to the companies they admire, and they take any mention of valuation risk as a criticism of the business itself. A company can be outstanding while the stock is still a bad investment.
Price and quality are separate questions. History proves this when you remember that $MSFT, one of the greatest businesses ever built, traded sideways for fourteen years, and $CSCO only yesterday returned to its dot com high after twenty five years.
This is why patience and value matter, and why even the best companies in the world can disappoint investors when the starting point is wrong. I will be writing about this in much more detail in my upcoming book, and I hope all of you will take the time to read it.
🌹
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RT @realroseceline: Imho there are small pockets of attractive price to value in the market, but overall the market still feels unattractive right now. People joke about Michael Burry when he says he does not understand the market, yet what he really means is that he cannot find value at prices that make sense. That is not unreasonable, it is common sense, and it takes real courage to step aside when you’re making a lot of money while everyone else is excited.
There are plenty of great businesses today with strong economics, real competitive advantages, talented management, and clean balance sheets. The issue is not the quality of these companies, the issue is the price you are being asked to pay. When you look at names like $NET, $PLTR, $CRWD, $SHOP, and others, the businesses might be excellent, but the valuations are stretched far beyond what the fundamentals can justify. Trees do not grow to the sky, and even perfect narratives eventually reconnect with reality.
When prices drift away from value, two outcomes usually show up, you either get a major drawdown of 50-80%, which we just saw with $DUOL, or the stock trades sideways for years while the fundamentals catch up. Neither outcome is unusual and both are simply the result of markets ignoring valuation for too long.
The emotional part is what makes this so difficult. People become attached to the companies they admire, and they take any mention of valuation risk as a criticism of the business itself. A company can be outstanding while the stock is still a bad investment.
Price and quality are separate questions. History proves this when you remember that $MSFT, one of the greatest businesses ever built, traded sideways for fourteen years, and $CSCO only yesterday returned to its dot com high after twenty five years.
This is why patience and value matter, and why even the best companies in the world can disappoint investors when the starting point is wrong. I will be writing about this in much more detail in my upcoming book, and I hope all of you will take the time to read it.
🌹
MICHEAL BURRY IS CLOSING DOWN HIS HEDGE FUND SAYING HE DOES NOT UNDERSTAND TODAY’S MARKET. 🤯 https://t.co/CywDhfUqaV tweet
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Finding Compounders
A Business Week article criticizing Henry Singleton’s aggressive buyback and acquisition approach .
Teledyne achieved 20.4% compounded annual returns over 27 years with Singleton at the helm.
So don’t listen to the press ! https://t.co/uaNWDXLkkQ
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A Business Week article criticizing Henry Singleton’s aggressive buyback and acquisition approach .
Teledyne achieved 20.4% compounded annual returns over 27 years with Singleton at the helm.
So don’t listen to the press ! https://t.co/uaNWDXLkkQ
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Dimitry Nakhla | Babylon Capital®
Warren Buffett 1998 Berkshire Letter 📝
Topic: stock market charlatans, imaginative accounting, pumping stock price, manufacturing desired earnings to meet Wall Street estimates https://t.co/1XceAW2dvc
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Warren Buffett 1998 Berkshire Letter 📝
Topic: stock market charlatans, imaginative accounting, pumping stock price, manufacturing desired earnings to meet Wall Street estimates https://t.co/1XceAW2dvc
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Quiver Quantitative
BREAKING: Renaissance Technologies, founded legendary mathematician Jim Simons, has filed a portfolio update.
They sold approximately $1.3B of $HOOD.
They opened a new position in $RGTI.
They also opened a position in Ethereum.
Full portfolio up on Quiver, link below. https://t.co/72GPV41Cf2
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BREAKING: Renaissance Technologies, founded legendary mathematician Jim Simons, has filed a portfolio update.
They sold approximately $1.3B of $HOOD.
They opened a new position in $RGTI.
They also opened a position in Ethereum.
Full portfolio up on Quiver, link below. https://t.co/72GPV41Cf2
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