Yes, because you guys buy smokestack industries, boring banks & yesterday’s growth
Not true
We simply want decent businesses at a sensible price with good odds of an attractive return
And what smart person thinks that’s a bad idea (or smell)?
Other than Jack D from Square who thinks paying $29bn for Afterpay’s $4m of H1 cash flow makes sense
But they’re growing massively
Well, if you want to give me £29000 to receive £8 a year, please do get in touch
I’ll even “grow” your return by 100% p/a for the next 10 years
Just know that by yr 5, you’ll have only recouped 0.9% of your investment & 28% by yr 10
and if they grow customers that fast, they’ll have 8bn by then?
But the world has moved on, we want exciting “stories” like Fintech & next-gen companies
Well, we can all drive fast but it’s called “breakneck speed” for a reason – broken necks
But you value guys have under-performed the world index in recent years
Yes, recent periods have messed with the long-term numbers
but people still enjoyed inflation-beating returns
And remember Aesop taught us in 500BC that “slow & steady wins the race”
But that’s history
oh unlike the “history” you used to choose hot funds such as Chinese ones with “great long term track records” earlier this year and that are now cratering
A different history?
Well, you missed the party at Tencent for years & I read “the average Chinese person spends 4 hours a day” on their platform?
Well, I spend 7 hours in bed every night but that’s no reason to buy a mattress company is it?
Didn’t work out too well for Steinhoff
Besides, President Xi knows about this 4-hour thing & it’s a problem not a reason
Anyway, forget history, just tell me which of these make sense?
Robinhood (ticker HOOD) listed this week & 2 days ago had a market cap of $59bn
$59bn for $1.3bn of 12-month REVENUE which is mostly “payment for order flow” and they warn could be banned…
Why?
Well, do you think Citadel (run by Billionaire, Ken Griffin), is buying orders from “relatively poor” new traders if it’s unprofitable?
But that’s the rich taking from the poor, I thought Robin Hood did the opposite
mmm
And don’t forget these crazy values mean they get included in indices when they rebalance & then the Passives buy them
I guess the company wants dumb money as shareholders, not people looking under the HOOD
Or
for $35bn
you can buy HP Inc, the number 2 PC manufacturer in the world
which grew revenue by 27% last quarter, generates billions in free cash flow which they’re using to buy back shares
And you’d have $24bn which is enough for a few US homebuilders with exploding order backlogs on 6x earnings
not smokestack, all growing & make sense
One day value investors will come up smelling of roses
by which time we’ll have all regained our sense of smell
Until then, leave the “stories” to Netflix