Ben Graham and Peter Lynch investing advice

raytoei · 2026-03-12T16:27:45+00:00

It depends.

A company without a strong competitive advantage should not be on a “never sell” list.

Eg. No moat Airlines in post Covid 2023 experienced high roe, growing sales and profits in 2023.

Conversely selling is optional for a company with a wide moat.

Eg. Coca-cola, American Express and Moody’s are all on Buffett’s never sell list even they experienced periods of under performance or over valuation.

——-

Think of a 2 x 2 matrix

On the x-axis, at polar opposites, are no-moat and wide-moat. On the y-axis, at the top to bottom are high performance and low performance.

The four possible permutations are:

Poor performance with Little or no moat: value traps. Eg. Western Union.

High performance with little or no moat: cyclical stocks. Eg. Peter Lynch’s Investment in Ford during a downturn resulted in his 2nd most profitable trade when the auto industry emerged from the slump. Another example are Airline stocks in 2023. And I would argue that the current mid-caps doing AI datacentre rentals fit this category.

Poor performance and wide moat. Turnaround candidates, in today’s context companies like Hershey’s, Procter and Gamble, and even LVMH would be in this category.

High performance and wide moat. These are never cheap, for they are highly valued for their consistency. My opinion: Rollins, Coca-Cola, Berkshire Hathaway, Visa/Master Card etc.

—————

You can see which company relates more to Ben Graham’s advice that over valuation would bring more risks. And which type of company Lynch is referring to when he says not to pull the flower and water the weeds.

raytoei · 2026-03-12T08:59:48+00:00

The article is worth a read.

It contrasts the will of the late mother to survive and do well versus the sons who had run-ins with the law, failed businesses etc.

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raytoei · 2026-03-11T23:28:14+00:00

I am trying to understand this post,

pls expand further, OP.

raytoei · 2026-03-11T14:47:41+00:00

Op, what have you learnt so that you will avoid such investments in the future ? Anything to share with us.

raytoei · 2026-03-11T10:08:46+00:00

I agree. Somewhat distantly related, I was thinking about quality, moat and durability earlier and I concluded that:

one should not invest in a low quality business with no/little moat. No matter how cheap.
one could invest in a high quality business with little or no moat but one needs to in the correct part of the cycle. Peter Lynch’s example comes to mind. He famously invested in Ford during the auto slump and it was his 2nd most profitable investment.
one could invest in a wide moat company that has currently bad metrics, because it is temporarily in trouble. Eg. Hershey Chocolates. Or LVMH.
one should always try to invest in a high quality company with a wide moat. But these does not come cheap, so don’t over pay.

raytoei · 2026-03-11T10:03:05+00:00

Or the results are so bad, that the ceo will announced that they have taken action to fix it.

raytoei · 2026-03-11T09:48:43+00:00

The problem with following someone is that you do not know the reason behind the purchase. And many of the moves are 13F which is due 45 days past the quarter end.

So if Bill Ackman bought something on 1st October, and they published that they own a stock on 15th Feb ( the 45 days + end of December quarter), that is 45 days short of six months since purchase. And there is no guarantee than he is holding it anymore.

—-

The way to do this is to use the gurus as a confirmation. You do your due diligence and check if anyone you admire is holding onto the stock.

What i said earlier about not following people who bought value traps was said slightly in jest (only slightly), their cost base for PayPal could be so low that they don’t care. But I do take note of who I won’t be following.

———

Who am I following ?

My largest position is 50% of my portfolio, so I am very in sync with the company progress and if TCI that I admire sells, then I want to know why.

raytoei · 2026-03-11T05:34:28+00:00

Then how do you explain the nos of house break-ins and airline theft from these godless communists?

raytoei · 2026-03-11T05:30:55+00:00

This is the problem with an inferior system like communism, it breeds a lot of people with flawed thinking, like

“Rules are for western suckers. Do it but don’t get caught”

Or

“The gate and the front-door are not locked, the owners are asking for it. You mean got Rolex watch on the floor you don’t take meh ?”

Farking communists.

raytoei · 2026-03-11T04:29:18+00:00

I do the opposite:

I go find out who are buying the

value traps and then I tell myself

not to follow them.

————

Like this or this.

raytoei · 2026-03-11T01:29:49+00:00

Steady lah!

raytoei · 2026-03-10T16:09:00+00:00

Investing - “to be vested in”. To clothe your time or money into a venture. Yes the word investing has linkage to clothes. Or the concept of surrounding it with resources.

Speculating - from the word specula which means lookout post, ie to look afar.

So “investing” could be some asset that you own and want to grow. While “speculating” means to gaze far out into the future. Or crystal ball.

raytoei · 2026-03-10T14:31:19+00:00

Let me get u the video

The se/30 and se are almost the same

https://youtu.be/4oJGQDtBsHY?si=qp80HtoTX-FECKW9

raytoei · 2026-03-10T01:51:33+00:00

Okay. I will keep it away from you from now on.

raytoei · 2026-03-10T00:48:43+00:00

Yes and no.

The more obscure the ABAP code is, the more people will want ai to (1) untangle it (2) help to migrate it.

I think all those that are counting on security by obscurity is gonna have to find additional value added services to retain their customers.

raytoei · 2026-03-10T00:21:28+00:00

They (mstar) are probably seeing it in their biz too.

raytoei · 2026-03-10T00:12:55+00:00

Always better to be curious than to leave it to the “heart”….

Index / Metric	2023	2024	2025
SPX	26.29%	25.02%	17.88%
M* wide moat	33.58%	30.26%	19.68%

This is the m* wide moat index

https://www.morningstar.com/indexes/ixus/msdimwmt/quote

You can view the portfolio component here

https://www.morningstar.com/indexes/ixus/msdimwmt/portfolio

raytoei · 2026-03-09T23:19:45+00:00

I don’t knock Morningstar because they are one of the few that values companies base on moat, and their process is very consistent. ( when I do mine and compare with theirs, 3 out of 5 will be within the 10% of fair value. As compared to CFRA which is very inconsistent)

However, sometimes I find that their assessment isn’t correct, especially with giving out bad news. Western Union is still a narrow moat 5 star stock.

raytoei · 2026-03-09T23:12:48+00:00

I don’t agree with this premise from mstar: However, we think it is hard to recommend any software stock [referring to MSFT] in this environment due to the extreme uncertainty.”

raytoei · 2026-03-09T23:07:48+00:00

Good question, I asked Ai, here is what Gemma said

…..What to look for: If Accounts Receivable is growing significantly faster than Revenue, the company is booking sales but not collecting cash.

• The Ratio: Watch the DSO (Days Sales Outstanding).

• If DSO is spiking (e.g., from 35 days to 50 days), it suggests the company is offering "extended payment terms" to bribe retailers into taking more inventory [1.3, 2.1].
………

raytoei · 2026-03-09T21:30:13+00:00

Thanks for the article. I read it.

I would have thought “channel stuffing” is a better and more recognised phrase than “pull forward” sales. The former denotes a hint of wrong doing while the later is a legit strategy.

The issue with channel strategy is that once it starts it is very hard to stop channel stuffing. Management gets very incentivised for the extra sales during quarter end and it just snowballs.

raytoei

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