Contrarian Value Investing » MSFT

Investing In A Volatile Market

alexg — Tue, 22 Jul 2008 01:46:11 +0000

So what does one do in a volatile market like we have seen lately? Absolutely nothing. After buying shares of a new company each day last week, I am sitting around doing nothing. I am spending my time re-reading the contrarian investing bible and reading the usual blogs and websites.

A particular Warren Buffett quote reminds me that doing nothing is good:

“”I call investing the greatest business in the world because you never have to swing. You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! and nobody calls a strike on you. There’s no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it.”-Warren Buffett

With 14% cash on hand, its tempting to get into some positions. Especially Microsoft which has been climbing the magic formula list this past week as it hits new lows. I continue to tell everyone I know that the magic formula has to be among the most undervalued books/sites/investing system around. Where else can I find a screen that looks for great businesses at a discount. Its only a matter of being patient and sticking with the system. For many years studies have proven that low P/E’s outperform the market, but investors/speculators continue to invest in companies that are trading at sometimes catastrophic P/E’s. Companies with high P/E’s are usually dangerous in this type of market as analysts expect companies to deliver outstanding numbers. What happens next? The company delivers great numbers (usually double digit growth ) but the stock gets pummeled (i.e. AAPL, GOOG,MSFT). How do low P/E’s fare during earnings season? Good. David Dreman highlights this in the book. Expectations for these companies are so low, no matter what kind of numbers the company reports, chances are a) a positive earnings surprise will make the stock soar (WFC) or b) the news has been priced in already.

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Magic Formula Stocks On The Move 7/20

alexg — Sun, 20 Jul 2008 17:04:57 +0000

Each week I run the magic formula screen to keep track of stocks moving in and out of the magic formula screens. I ran the screen last week but I forgot to save the results for the top 100 stocks with a minimum market cap of 50 & 200 million. I used to run the 500,1000,15000 screens but found there is a great deal of overlapping among the stocks screens. Finally, I would like to give Steve at MagicDilligence credit for first keeping track of the “moves”. He has not done it since June 28 (its time consuming) so I will be running my own little version on here. Below are the stocks on the move for the top 25 stocks with a minimum market cap of 50 & 2000 million

Top 25 Stocks With A Minimum Market Cap of 50 million

Who’s In

BroadVision (BVSN.OB)

Vaalco Energy (EGY)

Who’s Out

Acme Packet (APKT)

Ambassadors Group Inc (EPAX)

Top 25 Stocks With A Minimum Market Cap of 50 million

Who’s In

Broadridge Financial Services (BR)

Who’s Out

Microsoft (MSFT) – <—————-Interesting

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What stocks are you looking at? Part 1

alexg — Thu, 03 Jul 2008 06:39:27 +0000

Well folks, with volatility comes opportunity. The market is now 20% off its highs, which puts it in bear market territory. The 52 week low list gets longer and longer every time the markets has triple digit loses. Over at the magic formula investing website, some quality names are appearing in the screen. Now, if you consider yourself a contrarian value investor, this is a good time to create a list of names that could be potential buys. The headlines might sound as if the world is coming to an end, but we have been here before and the country has pulled together and rebounded.

Below is a list of stocks that I have a.) looked at or b.) currently looking at. As always, due your homework.

DOW Stock at or near 52 Week Lows

American International Group (AIG) – Stay away, I was wrong, management sucks. Firm has lost its culture

American Express (AXP)- Trading at historically low valuations; Buffett might be buying

Boeing (BA)- Cannot produce a plane

Bank of America (BAC)- Again, Buffett might be buying here as he originally started buying at $35?

Citigroup (C)- Who knows how much junk is left in the trunk?

DuPont (DD)- I don’t know much about….

General Electric (GE)- Old Faithful

General Motors (GM)- “I want my MPG…….oooops!”

Home Depot (HD)- Trading at historically low valuations

Intel (INTC)- Outside Circle of Competence

JP Morgan (JPM)- Has one of the best CEO’s

Coca-Cola (KO)- BRAND

3M (MMM)- Great ROE%

Merck (MRK)- Don’t know much, I believe they still have viagra lawsuits….

Microsoft (MSFT)- Don’t Know Much

Pfizer (PFE)- N/A

Proctor and Gamble (PG)- I love and own it at these levels

AT&T (T)- Surprisingly, not much buzz among the college crowd. More buzz surrounding Blackberry ( I have a blackberry myself )

United Technologies (UTX)- Im interested….

Verizon (VZ)- Love their products, hate their customer service

Im also very interested in Exxon (XOM)- The company is priced for $85 oil and estimates appear to be very low. (thanks Daveinhackensack!). Whether we like it or not, Exxon is a cash machine with a credit rating that is better than some countries.

Disclosure: I own PG,

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