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| Value Investors bet on good companies but not good economic times and conditions |
Actual Question:
Sir, I can understand initial fundamental terms as PE ratio, D/E,
Book Value , Current Ratio, sales, income, Base price, net sales per share and
some more basic terms also, but how can I assume that this or that sector is
going to perform in the given economic or in the expected future economic
scenario?
Answer
Dear Friend
Value investors do not worry too much about which sector will do well in the given and future economic scenarios.
Good companies that have existed for a 100 years would have seen many economic ups and downs. Therefore we bet on their ability to manage those situations.
Commodity stocks like oil, gas, metals, shipping have been hot very badly in the last couple of years. I bought even when their earnings were in red (loss) because the prices will eventually pick up. These shares were available at a discount to their book values. One should buy these companies during such situations at low valuations. Eventually the prices will improve and they will reward the investors handsomely.
This means we bet on good companies and NOT good situations.
This is value investing.
Thank you,
With Best Regards
Anand
Value investors do not worry too much about which sector will do well in the given and future economic scenarios.
Good companies that have existed for a 100 years would have seen many economic ups and downs. Therefore we bet on their ability to manage those situations.
Commodity stocks like oil, gas, metals, shipping have been hot very badly in the last couple of years. I bought even when their earnings were in red (loss) because the prices will eventually pick up. These shares were available at a discount to their book values. One should buy these companies during such situations at low valuations. Eventually the prices will improve and they will reward the investors handsomely.
This means we bet on good companies and NOT good situations.
This is value investing.
Thank you,
With Best Regards
Anand
