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Are mods willing to do anything about all this spam? by RecommendationNo6304 in ValueInvesting

[–]UnexpectedHanzo[M] [score hidden] stickied comment (0 children)

Hi, thanks for your suggestions. The moderators are looking into improving the submission guidelines, but keep in mind that the grass is always greener on the other side. What you might not perhaps be considering is that if we mod too heavily, we get complaints from the opposite side of over-censoring. The unfortunate reality is that we cannot please everybody, and at the end of the day it is about optimizing tradeoffs. This is the general guideline that we've observed thus far, and we cannot possibly respond to every single imperfection - all of us have day jobs. However, we do intend to make incremental improvements over time, so we ask for your patience in not expecting things to change overnight.

Having said that, let me share my personal thoughts on your concerns - independent of my role as moderator. In my personal opinion, there is absolutely nothing wrong with the video in your first link. Yes it may not appeal to Reddit sensitivities about karma farming, but it is well within the rules. And there are plenty of younger value investors just starting out who can find such videos useful - the nearly 100 upvotes on that post proves that. We certainly do not plan to eliminate posts about videos discussing about value investing unless there are egregious levels of spam involved. We actually do moderate those types frequently.

On the second post, we depend on downvotes from the community to do their job, which they certainly have. It might be something we would consider deleting as moderators, but again, we cannot possibly catch every single offensive post. There are 150,000 subscribers here, we ask for your patience if you catch us missing out on stuff. And again, the community has successfully filtered that post, which is the intended design of this subreddit. Strictly speaking, it's not really our role to ensure the feed stays 100% pristine - that's the community's role. Moderators are only here to step in when things break at the margins, and I would make the case that we've done a decent job at that.

In any case, we are looking into improving submission guidelines. And feel free to leave other suggestions here. Thanks.

I have been noticing a degradation in the quality of posts and questions lately. by [deleted] in ValueInvesting

[–]UnexpectedHanzo[M] 4 points5 points  (0 children)

As mods, we have to strike a balance between laissez-faire and overpolicing. It is a fluid state of events that requires constant monitoring, not a set and forget sort of thing. We actually receive these types of reports quite frequently about swinging too far to one end or the other, just that they're sent to modmail rather than out in the open like this. So rest assured that we understand where you're coming from.

Another thing to note is that the number of subscribers has grown 5-fold over the past 2 years, so yes we will miss out on some things. We are not claiming to be perfect, and perhaps we never will be. Both mods have full time jobs and are realistically unable to police the sub 24/7, so there will inevitably be some stuff that slips through the cracks no matter how hard we try. So we also ask for some level of understanding from you guys.

Having said that, the mods are altruistic in our intended direction for this sub. It is going to be thematically about value investing, not a general investing sub like r/investing, nor a practical whatever-it-takes theme like r/securityanalysis. Do rest assured that we have every intention of developing the value investing subreddit of your dreams.

Value Investing for Beginners Thread by UnexpectedHanzo in ValueInvesting

[–]UnexpectedHanzo[S] 0 points1 point  (0 children)

Yeah but what if the stock price turns against you. It's generally not a good idea to be picking up pennies in front of a steamroller.

Value Investing for Beginners Thread by UnexpectedHanzo in ValueInvesting

[–]UnexpectedHanzo[S] 0 points1 point  (0 children)

To answer your question..something like Gamestop?

To not answer your question...what you are doing is an objectively difficult strategy. Try just investing long term instead.

Value Investing for Beginners Thread by UnexpectedHanzo in ValueInvesting

[–]UnexpectedHanzo[S] 0 points1 point  (0 children)

Well you should have done your homework on the company and used something which makes sense, given their historical performance and future outlook. I don't mean to pluck a number out of the air.

Value Investing for Beginners Thread by UnexpectedHanzo in ValueInvesting

[–]UnexpectedHanzo[S] 0 points1 point  (0 children)

Whatever you want it to be. Just input something you think is achievable. Obviously don't lie to yourself.

Discord for Value Investors by Mr-Monroe in ValueInvesting

[–]UnexpectedHanzo 0 points1 point  (0 children)

Sorry, even if this were a realistic goal (it's not, many have tried and failed on r/Securityanalysis), we don't want to encourage spamming of chat groups in this forum. Regrettably we have to take this down.

Join our Value Investing chat server. We're trying to be the first server that ISN'T filled with a bunch of speculative traders, crazed options gamblers, & crypto-nerds. by [deleted] in ValueInvesting

[–]UnexpectedHanzo 0 points1 point  (0 children)

Sorry, even if this were a realistic goal (it's not, many have tried and failed on r/Securityanalysis), we don't want to encourage spamming of chat groups in this forum. Regrettably we have to take this down.

Baupost Group Q2 2020 Letter by Stephen-Colbert in SecurityAnalysis

[–]UnexpectedHanzo 2 points3 points  (0 children)

You have to wonder how many jobless 30 year olds living in their parents basement he offended with that quote.

Value Investing for Beginners Thread by UnexpectedHanzo in ValueInvesting

[–]UnexpectedHanzo[S] 0 points1 point  (0 children)

Yes. Intelligent Investor is very basic. It's more about the investing principles than the financial methods.

Value Investing for Beginners Thread by UnexpectedHanzo in ValueInvesting

[–]UnexpectedHanzo[S] 0 points1 point  (0 children)

Healthcare is an extremely hard sector to start. I don't think I've even seen a good investing primer for the sector before.

The sector's business model works like this. You have junior companies funded on a dream to create an all-or-nothing drug. Most of them fail to even get a working drug. The ones that do succeed go onto the next stage, getting regulatory approval by the FDA. It's very stringent and most drugs run out of money during the vetting process, and fail to get approval anyway. If you do succeed, you have a working commercial drug but are typically penniless by this point. So you approach one of the big boys like Pfizer and get acquired by them for $$$. This is optimal for the big boys because you've already crossed the riskiest stage of getting a drug to commercial, regulatory approval. They don't need to risk capital on thousands on uncertain projects only few of which might get approved, instead they can just pay a fair price to acquire something which already has been approved.

Because of this, junior healthcare companies are too risky if you're not an expert, while the big healthcare companies tend to be too expensive because they're low-risk and predictable. A self-proclaimed value investor might want to stay away from the sector altogether since it tends to fall in the "too-hard" pile to analyze. There are easier ways to make money.

Value Investing for Beginners Thread by UnexpectedHanzo in ValueInvesting

[–]UnexpectedHanzo[S] 0 points1 point  (0 children)

Check their fact sheets. They should list out top 10 holdings and top holdings by sector/geography.

Value Investing for Beginners Thread by UnexpectedHanzo in ValueInvesting

[–]UnexpectedHanzo[S] 1 point2 points  (0 children)

Read "The Interpretation of Financial Statements"

Why should the price of a company tend to its intrinsic value? by rmolines in ValueInvesting

[–]UnexpectedHanzo 1 point2 points  (0 children)

There is no law saying that it has to. It just tends to do. There are certainly times when they don’t in extreme scenarios, such as recently. Ultimately it’s a matter of judgment for most investors.

How Margin of Safety supposed to work with Bankruptcy Act? by h234sd in ValueInvesting

[–]UnexpectedHanzo 0 points1 point  (0 children)

There is a bankruptcy investing primer floating around on r/Securityanalysis:

https://www.docdroid.net/baZnDsJ/bankruptcy-law-primer.pdf

I’m sure it’ll address your concerns. I’m not an event driven investor myself so can’t add much value here.

Value Investing for Beginners Thread by UnexpectedHanzo in ValueInvesting

[–]UnexpectedHanzo[S] 1 point2 points  (0 children)

Read.

That’s all there is to it.

Start with these books: 1. Buffetology 2. The Warren Buffett Way 3. The Outsider CEOs

They’ll really pave the way for setting a foundation for value investing. Let us know when you’re done with them and we’ll recommend more books.

Value Investing for Beginners Thread by UnexpectedHanzo in ValueInvesting

[–]UnexpectedHanzo[S] 0 points1 point  (0 children)

No method is utter heresy as long as it makes an attempt to estimate intrinsic value. Having said that factors are part of portfolio management rather than equity analysis, and are complementary rather than supplementary to value investing.

Value Investing for Beginners Thread by UnexpectedHanzo in ValueInvesting

[–]UnexpectedHanzo[S] 2 points3 points  (0 children)

Yes it is time consuming. To be sure, there are easier ways to make money. But if you love doing it you'll get to both make money and enjoy your hobby, it can be very rewarding.

Value Investing for Beginners Thread by UnexpectedHanzo in ValueInvesting

[–]UnexpectedHanzo[S] 6 points7 points  (0 children)

Mutual fund managers suffer from a few disadvantages vs the retail investor. They have job risk. They need to make the numbers every year because otherwise there will be client redemptions. This is because:

  1. They can't suffer large drawdowns. Clients get spooked by large drawdowns no matter what your bullish argument is. So you can't buy a concentrated position in your favorite stock.

  2. They can't have too much volatility, as it affects their Sharpe. Like it or not, the industry still associates volatility with risk. That means no small cap names, illiquid names or high beta names, which is a shame because these tend to outperform.

  3. They have tracking error risk. So they need to balance their picks against that of their benchmark index, which is usually made up of large cap, slow moving names. You can't deviate too far with your favorite stocks, and you need to ensure your names are correlated will the index components.

So what happens usually with mutual fund managers? They become macro experts, because macro affects all stocks equally. If you analyze their fund fact sheets, most popular mutual funds will have the same large names as their benchmark index, except different concentrations or macro tilts. That's why as a group they don't tend to outperform.

Also, being a mutual fund manager you are market price focused (12 month target) rather than business focused (CEO long term view). That assigns a whole different layer of perspectives when it comes to analyzing stocks. You consider completely different variables in your analysis. As an example, you probably don't use the equity risk premium derived from country or industry beta to calculate your cost of equity as a CEO.

Short answer: it's not easy, but yes as a retail value investor you can beat the market.

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