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10,000 Comments and Counting

Insightful Insights, Investing Education, Value.able | Comments (40)

10,000 Comments and Counting

Early this month we hit a milestone worth celebrating.  Thanks to your incredible interest in the value investing approach advocated and discussed here we hit 10,000 comments.

Thank you for your interest, your passion and your generosity. It is amazing and I cannot be more proud of the incredibly diverse directions you have all headed with the new found knowledge from Value.able.

Thank you also for your encouragement and taking the time to share with me just how much you have been impacted by Value.able. My team and I are delighted to hear your amazing stories of investing success.

Speaking of stories, here is one of my recent favourites. It’s from Craig, a Graduate from the Value.able Class of 2010. It’s the story of Eddie and his bike…

Twelve year old Eddie has a paper round.

He bought a bike for $10,000 (its a bloody good bike) and earns $1,000 a year, after all expenses (new tyres, chewing gum) and tax (there’s no tax as the bloke who owns the newsagency pays him cash).

Eddie’s happy, but he wants a new playstation, so he offers a 50% share in his operation to family members.

His brother’s keen but the $10 he gets for mowing the front lawn (the backyard is fake grass) means he doesn’t have the money.

His teenage sister is keen but she’s running up huge mobile phone bills which accounts for all of her pay from McDonald’s.

His old girl’s keen but she just bought a new Apple product, so she’s got no money to spare.

His old man however, has squirreled away $5,000 by doing some overtime at work, and had been shopping around for somewhere to put it to work. ING are offering 8% (this is 2013), so the old man says to Eddie: “Look son, I can get 8% at the bank.”

“You can get 10% with me dad, if you hand over that 5 grand.”

“Yeah but you might want to do something else one day, or your bike could need replacing, or you could – god forbid son – have an accident. With all that risk involved, I wan’t 12.5%, so I’ll give you $4,000 for me half share.”

“Four large? You’re killing me dad. Don’t you know banks can go broke?”
“Not in this country son. I want 12.5%.”

“There’ll be another GFC, you wait, but people will still want the paper delivered.”

At that point, the boy’s mother approaches, holding her new iPad.

The husband looks at her, then back to his son: “Make it $2,500… I want 20%.”

What is your funny or amazing Value.able story?

Go ahead, Share, Encourage and Inspire. And thank you for helping so many investors value the best stocks and buy them for less than they are worth!

Did you contribute your photo to the Value.able Graduate Class of 2010? The Class of 2011 is open and accepting Graduates. Email your photo and join Bernie, Martin, Alya and Jim Rogers.

Posted by Roger Montgomery, author and fund manager, 13 April 2011.

INVEST WITH MONTGOMERY

Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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40 Comments

  1. Darryl Rowley
    :

    Roger, I first heard your comments on the podcasts aired on the ASX website and thought how factual they were, how all you said made loads of sense. I’d listened to others talking about other aspects of the selection process and realised how useful turning off the marker REALLY was.
    Now I use aspects of Value.able, Buffetisms and the Price Cycle attitude to select those companies I will watch. And I watch for a long while.
    Never, never do I take notice of hot tips because I’ve learned through costly experience that many dont have a clue what they are really talking about.
    Thank you for your truthful insight into investing. I really have learned that this game really isnt all that hard if you are prepared to stick to your plan. God bless you.

  2. Ron Bell
    :

    I would like to buy your book ,Value Able by direct credit to your bank account, if this is acceptable.

    Thank you,
    Ron.

  3. david phillips
    :

    response to your latest message, roger. Every share in my portfolio is post sept 2010 and is based on my calc of I/V.
    Many of my values are not in line with your latest IVs but were more in line six months ago.
    I go on my calcs and see ORL,TGA,ARP higher than your post and MCE somewhat lower.
    Despite copping a 35% drop in value my group of shares is 10% above asx200 from sept 1 2011
    my thanks and best to you and all.
    david

  4. Will
    :

    Hi everyone,

    I was just wondering what the consensus was about the MCE’s share issue recently. Is it a necessary evil in the short term, for a brighter future?

    I thought a company issuing more shares is a negative. I’d like to know how much your IV have changed.

    Cheers Will.

  5. Brad J
    :

    Thank you again Roger for all your support and for this blog.

    I had just started reading up on Ben Graham and getting every bit of information I could on Warren Buffett when I saw you on Sky Business. I purchased your book as soon as it was released and haven’t looked back. You helped me put all I had read and heard into practice and the blog has backed this up with support.

  6. Graeme
    :

    Thank you Roger for you continual insights on the blog. You could have sent us all out into the wilderness with you book to fend for ourselves, but instead you set up this great community and resource center to aid us in our travels.

    Graeme

  7. Scott W
    :

    Prior to my first meeting with Roger I had been a long suffering believer in the market. More than a decade of making some poor choices and a few lucky chances.

    I still have a few bad habits. Eventually I will bite the bullet and dump my Virgin Blue holding. I still have 2 miners, one saw better days when it was Oxiana, but FMG is also still in the black for me. Perhaps time to give them both another valuation, rather than hold on for hope.

    My real naughty habit is overseas though. My account in Asia has been more luck than real work. Shares in HSBC and a range of unit trusts chosen purely on their recent history have been up and down.
    Using the value able principles I have recently found a fund I will switch into that is purely run on value investing principles, and the performance is good as you would expect.

    In terms of Asia I know that a few people make a comment here from time to time, however I would be very happy to build up that discussion. I discovered recently that Value Investing as a term get the most google searches in Singapore and Hong Kong. So for others interested in directly investing into the Hong Kong and China markets I am doing my best to apply Value Able there as well, I think I am in good company with Jim Rogers also a China bull.

    Congratulations on the milestone Roger. I hope that you are wrong in your prediction from a short while ago that your brand of Value Investing would lose the current gloss as the market moves to a different phase. But you know better than me, so I am happy to share my business knowledge and insights while absorbing the investing smarts of everyone else, especially yourself.

    • MatthewR
      :

      Scott

      I hear you

      i recently bit the bitter (and expensive) bullet, and sold TLS, VBA, MQG, LEI and a managed fund, i think all at a loss, and have now put the $ elsewhere

      tough lessons

    • Steve I
      :

      Scott,

      Whilst Asia will be the way of the future, I personally would suggest making sure that you have mastered all opportunities in our market first before exploring overseas. There continue to be investment opportunities here and I personally have not yet run out of ideas.

      It concerns be greatly with so many people recently rushing off to invest overseas with no previous experience an I think that it is a quick way to get burnt.

      Firstly, one should understand why the aussie dollar is ‘high’. I personally think it will only grow strongly unti we have some level of credit destruction. This could be a while yet.

      Secondly, investing overseas creates greater research requirements ‘on the ground’ and also with regards to tax. These layers mean that you need to ensure that any investment opportunity provides compensation for the additional time.

      There have been Chinese shell companies listing on the US stock exchanges with subsequent price falls when it has been discovered. Therefore here are much greater risks when your aren’t familiar wig the market and potential for fraud.

      Whilst saying all of that, if I were investing overseas right now (which im not) I might consider china, India and south korea due to their growth profiles. Probably more of India and south korea than china at the moment.

      This is not advice, it is just my personal opinion.

  8. Kerry P
    :

    Hi Guys,

    I am trying to find some previous comments posted about Leighton Group but the links seam to be taking me around in circles.

    Can anyone help with this matter.

    Has anyone done The LEI IV Recently.

    Ash ?

    • Matty
      :

      Hi Kerry,

      I’m no Ash or Roger, but I valued LEI at about $18.59 before the February update. Saw that they were going nowhere and decided to prune from the portfolio. One of the successful applications of a Value.able valuation and forecast to form the basis of a SELL. This was really priced for more than perfect business performance. Unfortunately we see things have not been running so perfectly for LEI and I think we see price gravitating to value.

      I haven’t bothered to fiddle the numbers for the equity injection but can’t imagine it will be seen in a value.able, value-adding light.

      Matty

    • Ron shamgar
      :

      Why buy 4th best when u can buy the best – matrix,forge,decmil,Maca,mineral resources!!!!

      • Ash Little
        :

        Hi Kerry,

        I tend to agree with ron.

        The debt has been an issue for me for some time.

        Plus they have lots of off balance sheet funding that will become on balance sheet when the new accounting standard comes into effect.

        When the 30 June 2010 accounts comes out I restated them using the new leasing standard (To restate them properly you need more info than is in the accounts but you can be approximately right with a few assumption)

        They immediately got on my avoid list and I think a few bankers eyebrows will be raised when they have to show all the off balance sheet funding.

      • Kerry P
        :

        Thanks for all your responses,

        So when Roger says to look out for companies who’s price falls below it’s intrinsic value, he is saying that this should be for no other reason than Mr market says so, and not because they have had some short term set backs
        Which has halved their share price and is likely to turn around in the next couple of years ?

      • Ash Little
        :

        Hi Kerry,

        Bad news often comes in 3’s plus I think more write downs are to come particularly in relation to the airport toll in brisbane.

        I am just being conservative

      • Steve I
        :

        Why is it so likely to turn around, if you are talking about LEI? Looks to me that recent events are just reasons for the market to bring the price towards IV.

      • Kerry P
        :

        Hi Steve,

        With my limited experence; LEI is the first big cap that I have seen drop so dramatically/quickly, failing a global interruption to the market and I am just trying to get good at spotting opportunities to buy below IV

        It seems to me the big ones are more likely to trade and stay well above their IV.

        I saw some comments here about COH lately, how they are very unlikely to get any where near their IV any time soon.

        Therefore I was watching LIE to see what will unfold.

        To get in on a COH we need a nice little issue or two.

        I will proceed with caution, thanks again for your responses

  9. Steve
    :

    Roger,

    At the risk of sounding corny I want to turn your comment around and say thank you for YOUR interest, YOUR passion and YOUR generosity.

    Steve

  10. Andrew
    :

    I was lucky enough to receive value.able halfway through doing my diploma of business. This has resulted in me being able to use and merge both together to increase my skills in investing (you would be surprise dhow often they merged especially in the competitive advantage and finance elements). This has caused me to make a number of discoveries and become a better investor.

    First story i will share is, i was extremley concerned about my ability to in the finance elements of my course. Not for lack of skills but it is something i am interested in but have had no background in it before. After hearing Rogers well worded and understandable style of commentary on such matters in the book and on this blog i am happy to say that i have received distinctions in both the preparing and managing financial plans including receiving both a 96% and 97% for two of my assignments. I know this is down more to Value.able and htis community rather than the text book as i didn’t use a lot of the text book for the assignments. So thankyou Roger and everyone else for helping me get closer to finishing my course and get a good mark.

    The second is that by using both value.able and my course i have finally come up with a method, criteria and thought process on being able to identify quality companies and buying them under intrinsic value. It resulted in what i am currently calling, although it is a working title, Castle Analysis.

    I understand a lot more about investing and business in general than i ever had and value.able has played a good and important part in that. One day i even hope to put my ideas that have been generated in the past year into process and one day Roger might be giving my company an MQR.

    So thanks once again to Roger, your team at montgomery HQ and everyone on this blog.

    • Sav
      :

      Don’t sell yourself short mate. I am sure Rogers booked helped, but the marks of 96% and 97% on your assignments were probably more to do with sheer bloody hard work on your part.

      Well done.

      • Ash Little
        :

        Agree Sav

        I have seen Andrew grow as an investor greatly in the last 6 months.

        Great to see Andrew we love your contributions

  11. Peter M (Mully)
    :

    Congratulations and very well done to you and your team on achieving this milestone. Thank you also for your book, blog, presentations and willingness to share your knowledge and insights which have had a profound and positive influence on my investing approach and outlook. Wishing you and the entire blog community a bright and prosperous value-able investing future.

    Mully

  12. Wayne G
    :

    Not sure what is the better read. The posts or the RB book Value_Able.

    Well done of the 10000
    Thank you for an exceptional site / blog

    Wayne G

  13. Arthur
    :

    Hi Roger,

    What’s your thoughts on covered bonds, are they another financial weapon of mass destruction or simply a conservative investment option?

    Regards,

    Arthur

  14. John M
    :

    Hi Roger, your wonderful team and all fellow Value.able afficionado’s,

    Congratulations on this most extraordinary achievement.

    Purchasing the 1st Edition of Value.able was my best investment ever. Since then my eyes have been opened to a whole new world. I have a new context in which to evaluate investment ideas.

    Words don’t do justice to how thankful I am to you Roger.

    Happy commenting for the next 10000

  15. garry
    :

    congratulations roger,
    A fan of the blog, and to the regular contributors a well done also. I find most posts informitative and insightful.
    I noticed last night roger on your money your call, you didnt have a intrinsic value for QUB.I found that a bit strange as i thought you had all stocks valued on the asx.Its been a favorite of mine for a while,what is your intrinsic value of this stock please?

  16. Jason
    :

    Hey Roger,

    Congrats on 10,000 comments.

    I watched you on YMYC tonight, at the start of the show the gentleman from Austocks was saying the Market was cheap on an 11/12 PE ratio and I think you (roughly) agreed but I remember you wrote this comment yesterday comparing the change in intrinsic value of ORL:
    “Just demanding bigger margins of safety – not much of value in the market”

    I was just wondering if you could possibly expand on the different sentiments?

  17. Ash Little
    :

    Hey Roger and Team,

    I know the blog has had a some mind flak recently but I think the variety of opinions and diversity of background is what makes this place so special.

    Plus we all have a bit of a laugh and don’t get upset when someone disagrees with your view.

    Hey thats what makes a market

    I can’t actually remember when I started blogging on this site but I do remember that when I did I thought I knew everything there was to know about value Investing.

    How totally wrong I was.

    The Info and knowledge I have gained cannot be expressed in word and is the major reason why I love helping the ones new to the blog and see them get to graduadte status.

    Thank you Roger and Team

    • Greg Mc
      :

      At risk of this degenerating into an all-in hugfest, credit where it is due. This blog would probably be approaching only 9000 posts if Mr Little were not in attendance and the majority of his contributions top the quality scale (even if he suffers amusingly from fat finger syndrome). Ash probably gets almost as many requests for assistance as Roger now and never fails to respond. Thanks cobber.

      Most people want to have control over different aspects of their lives. In my humble profession, among other things I endeavour to give people control over their physical injuries and I get a kick out of watching people realise that they can not only recover but prevent recurrence – they have control over the situation and can then be independent. Roger’s blog here (and his underpriced book) has given many people the opportunity to learn to secure their financial future over time and contribute to financial independence. Hence the regular outpourings of gratitude.

      Now of course, this blog, the facebook page, segments on Sky Business and so forth raise profile and there’s a potential business payoff there but realistically Roger could have hoarded his knowledge and ended up sitting on a pile of gold coins higher than his gold shod horse in his gold plated stable on his golden delicious producing hobby farm with the gold letter box in the Kiewa Valley anyway.

      However, he saw fit to share. And what a difference it has made. My thanks again, Roger.

      • Jim
        :

        Here,here. Thanks to the whole community.

        Special thanks of course to Roger-your clarity of thought continues to amaze me.

        And special thanks to Ash Little for your terrific contributions

        Cheers
        Jim

  18. Leon
    :

    A funny investment joke!

    Investment advice

    If you had bought $1000.00 worth of Nortel stock one year ago, it would now be worth $49.00.

    With Enron, you would have $16.50 of the original $1,000.00.

    With WorldCom, you would have less than $5.00 left.

    If you had bought $1,000.00 worth of Budweiser (the beer, not the stock) one year ago, drank all the beer, then turned in the cans for the 10 cent deposit, you would have $214.00.

    Based on the above, my current investment advice is to drink heavily and recycle.

    Moral of the story is when investing look at earnings, debt levels and ROE.

  19. Wing
    :

    Hope this can be the 10,001 comment, btw it’s a real story below:

    On 11 April 2011, HST dropped 73% in market value, my colleague emailed me….

    C: “Is that the biggest % drop in ASX history for one day!??!”
    ——————————————————————————
    Me: “No, there are still ABC learning and BNB, fall from something to Zero value. “
    —————————————————————————–
    C: “Yeah but they didn’t fall 73% in a day!!!!”
    ——————————————————————————
    Me:” From 0.010 to 0, it’s still 100% mathematically” lol
    ——————————————————————————
    C:” yep, good point wingman… haha”
    ——————————————————————————
    Me:” Sorry, there is still another one even worst… Brisconnect, for every share with market value of 0.001, you will owe the instalment payment of $1… So what’s the %? LOL”

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