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Saturday, January 11, 2014

In the Long Run, Deep Value works and it works very well

Over the past few months I have sent you some examples of how well my value stock picks have done over the past year. Today I want to take a step back in time and show you the real power of value at work. My holding period on stocks tends to be much longer than most people today, especially those who offer a newsletter product. They all tend to favor holding periods of days and weeks looking for the quick profit. In my experience that only works in bull markets (and not always even then) and misses the real money to be made in the markets. Buying business when they are deeply undervalued and trading for less than their asset value and earnings power and holding for several years is where the real money is made.

Back on February 22 of 2012 I wrote a column on I wrote a column entitled Value-Its Not For Everyone. I suggested buying five stocks at the time. The reruns have been extraordinary for some relatively boring stocks that have never showed up on the hot moneys radar screen but have made investors who heeded the value call a pile of money.

JBSS- + 137%
FIBK - +127%
PSTB- + 52.21%
TUES-  +287%
SNBC +17%

On July 17 of 2012 I penned an article titled Asset Based Value Investing Works. Again I suggested a few stocks that were trading at a discount to book value. Since then:

FBNC +90%
KELYA +107%
HERO +86%
BANR +111%

Let’s go back a bit further to September 27 of 2011. I worte a column titled Tried and True that emphasized using book value to pick stocks. I mentioned 5 stocks as buy candidates. Since then we have:

TLABS  -21%. A rare stinker that was recently taken over
AIZ +97%
PFG  +124%
CINF +111%
MU +267%

I show you this not to hold myself out as a genius or smart guy. The thing I have been smart enough to do is to study and learn from great investors like Ben Graham, Walter Schloss, Seth Klarman and apply what I learned from them, I have developed the patience and discipline to buy cheap and hold until the stock return to fair value and beyond. I still own most of the stock mentioned in this note as they are not yet overvalued.
During the years I have owned these stocks I have not traded around them or worried very much about the day to day quotes. I stayed in top of business conditions and as long as they were safe and cheap I held them. I never left a ball game or party because the one of my stocks made a major move and I had to act.  I didn’t have to ruin a dinner party by obsessively checking my stock prices. I never sat up after everyone else went to sleep reviewing my stock charts. I let time and value do the work for me and I simply do not know too many traders who have racked up the profits that deep value investing has provided over the years I have been doing this.

Deep Value Investing works and it works very well. I can teach you how to use patience and discipline to make it work for you so you can enjoy profits in the market by investing in a business-like fashion. I have three newsletters that can help you make more money over time by ignoring short term noise and focusing on the only important questions.

Is it safe?

Is it cheap?

I have put together a package of three offers for you. Pick the one that’s right for you and join me in becoming a successful deep value investor.