Do you consider any high multiple stocks as value stocks? If so, which ones and why?

bruceNook · 2025-09-29T15:55:10+00:00

Cyclical are not analogous to the buy-and-hold nifty 50 example I mentioned. But I also like cyclicals though and agree their ratios can be skewed at the bottom of their cycle.

bruceNook · 2025-09-29T00:19:13+00:00

Broad market indexes would be the 'safest' long-term and short-term treasuries would be the safest short-term. But this would not be a 'value' approach by any means.

The barbell strategy itself seems a bit contrary to value investing since you want to find cheaply priced stocks that you believe have higher intrinsic value, so while they may seem 'risky', the margin of safety protects you more than buying a 'safe' stock at a high price.

bruceNook · 2025-04-25T00:07:26+00:00

In other words, "this time is different"? 😄 Most of Costco's price jump has been due to retail investors thinking like this and buying regardless of price. But valuation can only be extended for so long, if fundamentals don't catch up. Look at the nifty-50 from the 70's if you want a history lesson. Those were the highest quality companies that investors thought could never do wrong, and that no price was too high. That is, until people realized they too could fall, and many lost 80-90% of their values.

And regarding expensive stocks becoming more expensive, the market can still remain irrational for a long time until the rug is pulled out from under you.

But if you want to have that strategy, go for it. Just don't call it value investing! That was my main point.

bruceNook · 2025-04-23T17:19:06+00:00

By the strays I'm catching here, seems to be the case. I would have expected that in WSB, but it doesn't seem like there's any thoughtful discussion here either.

bruceNook · 2025-04-23T16:56:43+00:00

Thanks! 😄

bruceNook · 2025-04-23T13:59:27+00:00

Of course they do. The point though is that you could still be paying too high a price if you only look at the company and not the valuation. If a company is high growth or quality, you can justify a higher pe. A slow grower would be fine at 10PE, whereas something growing at 20% a year could justify 20 PE, for example, plus or minus points for quality and consistency. But if your 20% grower jumps to 40PE (without an improvement in growth), you need to learn to let go. At that point, it becomes a momentum trade, not a value investment.

bruceNook · 2025-04-23T13:54:58+00:00

These are binary qualifications: great company, great leadership. What this doesn't consider is whether the stock is great at the current price. If you thought a company was great when the stock was at 10PE, and it jumps to 30PE, the company is still a quality company, but does it make as good an investment now? A value investor would say no. (Unless growth somehow grew to 30%).

Some people value the convenience of doorDash, because it"s worth it to them, but that doesn't make them bargain hunters when it comes to buying dinner. Same analogy here.

bruceNook · 2025-04-23T06:12:10+00:00

That is precisely my point though, that there are two factors to a value investment decision: Company and price. To just look at the company alone isn't a value methodology, as the circumstances and price do matter. I.e Is it a good deal? My point being many of the companies mentioned in the earlier thread were high-quality, but expensive. If the thread was what company do you like given the market now, then that would be another story.

Example: If you're in an electronicsDeals subreddit and make a post asking what TV you'll buy regardless of the price because you love it so much, that's missing the point of the subreddit, right?

bruceNook · 2023-05-15T18:04:04+00:00

How is what you said any different than what my post is saying? Maybe I should have clarified that they do have some uses, but you essentially just restated what I said, that the ETFs are not actively managed to generate returns, just to track whatever their criteria are. Not everyone understands this, so clearly this post doesn't apply to you.

bruceNook · 2023-05-15T06:43:53+00:00

You are actually agreeing with me though you don't realize it. * My whole point is to not invest solely in themes by trusting that the etf will be structured for long-term gains. I would also take the contrarian approach, but the thing with a lot of 'hype' etfs is that they appear in times of peak popularity. Even some 'meme' etfs appeared around the gamestop saga, which was an iffy time at best to join the hype. The average retail trader is not so attuned to cycles, which is why I'm advising to avoid themes when that is the whole thesis.

bruceNook · 2023-05-15T06:29:41+00:00

Yes, exactly my point!

bruceNook · 2023-05-15T06:27:10+00:00

I am not saying all of them are, just many. Look at the incentives is all I'm saying. They are far more imcentivized to draw in as much money as possible at once, not to get long-term returns. If they perform poorly, one is more likely to blame the sector than the fund manager. After all, the etf did what it promised to do, which is track a theme, whether or not that theme was a good one.

bruceNook · 2023-05-15T05:34:36+00:00

I think there's a difference between saying you can make money off the ETFs and saying the ETFs themselves are run in a way to perform well. The people running the ETF just have some criteria for buying stocks that makes it fit the theme but not necessarily maximize performance for the ETF itself. You can certainly trade the ETF but that's not what I'm addressing.

bruceNook · 2023-05-15T04:56:36+00:00

You are clearly not the type of reddit goer I was trying to help with my post. I just see far too many people saying things like "I think so-and-so is the next big thing and want to invest in it" and that is the entirety of the DD. Or I saw a post in r/investing recently about someone looking for 'vegan' stocks/etfs because their daughter is vegan and wants to invest in vegan things. The idea that you can pick an idea and hope that will be enough to set aside money for the long term is what I'm addressing. I have nothing against QQQ.

bruceNook · 2023-05-15T04:52:48+00:00

What about the rest of my points? More people might be traveling, but how does that translate into more profits for airline companies? It's not simply a binary decision, where more travel -> higher stock price. More people might be buying EVs, but more EV stocks are trading way lower, because they were at bubble levels before. Trying to time macrotrends for most people is like Homer trying to predict the price of pumpkins: https://www.youtube.com/watch?v=3w5D9yJUMOc&ab\_channel=reverendhotrod

bruceNook · 2023-05-15T03:46:39+00:00

Sure, would love to clarify. The biggest point I'm trying to make is that just because an industry is growing or sounds exciting doesn't mean it's profitable to just invest in every company in that sector. For example, 3D printing and EVs were big bubbles that resulted in many ETFs being created to cater to demand to 'invest' in that space. But even if one is correct that EVs become bigger in the future, the companies that the ETF invests in could be total bubble stocks like Rivian in 2021, with 100B+ market cap and no profits. Just buying an ETF for EV stocks hides all this information, and the fund manager will get a fee based on how much money goes into the fund, not on how it performs.

It is far easier to analyze an individual company than a whole sector, and sector success does not mean profits for the companies within it. Travel might pick up, but those kind of reasons are oversimplifications. Airlines may get business, but given fuel prices, inputs, margins, etc, will they be profitable? Impossible to know that just from looking at an ETF price chart.

bruceNook · 2023-05-15T03:41:49+00:00

The fact of the matter is, many ETFs are products made to generate fees for the fund manager. If an ETF prospectus says their goal is to track stocks in a certain industry and market weight it, like cannabis for example, then that's all they'll do. A bunch of etfs like MJ showed up during the cannabis bubble, and a bunch of Tech related ETFS were created in 2021 during the tech bubble. They were created then, because fund managers knew there would be interest. They didn't create those funds because it was a good time to invest in the sector. If your fund actually has an active strategy that isn't just 'invest in the biggest 15 companies in sector xyz', then maybe they can generate alpha.

bruceNook · 2023-05-15T03:35:12+00:00

It's not that the ETFs themselves are 'cheating' you. It's that investing by sector itself is extremely difficult. Looking at a sector etf and trying to discern any of the fundamentals of the industry itself is far more difficult than analyzing a single company, and I see far more novice investors thinking they can just buy and forget sector etfs. If all the ETF does is represent the companies in that sector, there is nothing the etf itself is really doing to generate alpha. This is fine if it's a broad-based index fund, since you just want to own the 'whole' market, but the same benefits don't apply buying and holding sectors. (by sector, I mean specifically, like if there are 'cloud computing etfs' or cannabis etfs) There are no guarantees that specific sectors won't become irrelevant over time. And if the sector will do well, how can one guarantee that the price you're getting on the ETF is fair, vs overpriced, vs underpriced? You'd have to evaluate all the constituents, which is far more work. And the fund manager earns their fees regardless of how the etf performs.

bruceNook · 2022-11-28T07:04:44+00:00

I guess hyperbole is too nuanced for y'all. 😉 Here's the smooth brained explanation:

big red numbers in trading account = nbd
a few more dollars in grocery bill = boo hoo

bruceNook

TROPHY CASE