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Strategies & Market Trends : Value Investing

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To: Spekulatius who wrote (56694)1/18/2016 10:01:29 PM
From: Jurgis Bekepuris   of 69205
 
Other than that, I agree with buying when a stock appears to be cheap. However, I also try to take into account what the macro could look like and what it means for certain sectors. Value investors always seem to underestimate the headwinds that a bad macro (or micro) can create for a certain industry. For example, I thought that VALE @$15 looked really cheap, as it was close to book and has some of the lowest costs in the industry. But with Brazil and Iron ore prices going to the toilet simultaneously, the stock easily hits $2 and I am not sure it's attractive here.
I really don't want to get involved into macro-or-not-macro meta discussion.

However.

You are doing Monday morning quarterbacking with your VALE example. You know now that Brazil went to toilet and iron ore went too. But did you really have enough info to make macro call beforehand?

Same with oil. Now everybody "knows" that oil was supposed to go to $30. Where were all the experts when it was $100? OK, forget about that, where were they all when oil bounced to $60 last year?

Do you really think you can call macro events? If so, how about couple predictions from here (with time intervals and without vague hand waving), so we can learn how good you are?

Mike Burry is probably the only value investor who has made great macro calls. Buffett is pretty lousy on macro. Most other big name value investors are either macro-agnostic or underperforming or both. (Actually, nowadays, it's hard to find big name investors who long term outperform, but that's another discussion).
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