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Monday, April 4, 2011

Nothing Worth Writing About

Sorry for the lack of posts recently, but I am just not finding too many cheap stocks to write about. I find myself shifting more towards cash.

There are a number of stocks that are trending in the value investing community. Most appear cheap on a number of metrics and I expect investors should do decently with them. However, at current prices they are not blowing me away. I find myself constantly reminded of Warren Buffett's punch card analogy.

"I could improve your ultimate financial welfare by giving you a ticket with only twenty slots in it so that you had twenty punches - representing all the investments that you got to make in a lifetime. And once you'd punched through the card, you couldn't make any more investments at all. Under those rules, you'd really think carefully about what you did, and you'd be forced to load up on what you'd really thought about. So you'd do so much better."

I am just not finding too many investments that are 'punch card worthy'.

Perhaps, it's the fact that the stock market has had a tremendous run off its March 2009 lows. The 10 year PE ratio now trades at 24x, 50% higher than its 16x average.


Either way, I like to remember another great Buffett quote. 'The ability to say 'no' is a tremendous advantage.'

Maybe Vito Maida's patience is starting to rub off on me after-all.
 


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