So we briefly talk about blue chips buying and pricing, and it seems I should have posted this one day later.
James Montier has a good article debunking some “snake oil” in the investment world, which I added to my previous post.
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Here’s another interesting discussion on Price versus Quality by an Indian value investor who was invited to lecture at the Columbia Business School.
http://oldschoolvalue.s3.amazonaws.com/resources/021.fundoo-what-happens-when-you-dont-buy-quality.pdf?utm_source=buffer&utm_campaign=Buffer&utm_content=buffer4005c&utm_medium=facebook
Here’s another interesting discussion on Price versus Quality by an Indian value investor who was invited to lecture at the Columbia Business School.
http://oldschoolvalue.s3.amazonaws.com/resources/021.fundoo-what-happens-when-you-dont-buy-quality.pdf?utm_source=buffer&utm_campaign=Buffer&utm_content=buffer4005c&utm_medium=facebook
thanks hui leong showed me that but that kinda prove more that you can buy quality at any price
Haha! That was the message I got from the study too. That sometimes, quality companies can give investors magnificent leeway when paying a seemingly ‘expensive’ price. Way more interesting to me was, how companies that earned high returns on capital, TENDED to earn high returns on capital in the future as well.
That’s almost a head-on contradiction to the theory that high ROE companies tend to revert to the mean. Perhaps there should be a qualifying statement that heavily-levered companies with high ROEs tend to revert to the mean, while lightly-levered companies with high ROEs tend to continue earning that high ROE?
I hope there’s a study on that!
bro i think perhaps using ROIC makes more sense. but i think its multi factors really. net margins consistently high, ROIC consistent for some time, quality young management.
the question becomes are the blue chips high quality business