Fliujniligui's Blog : Value realm of dream ?

Everyone seems to be selling everything at any price to buy expensive T-bills which have a very low yield.

By definition, doing lately what everyone has been doing for a sustained period of time is often the worst possible move. Stocks had to be sold one year ago, rush selling now is to be called into question except for its psychotherapeutical properties of favoring sleep and illusory comfort.

I wonder if this is a sound move to sell a valuable company with a wide moat and no debt, giving a dividend higher than the T-bill and gathering income in multiple currencies from all the world. What happens if the company survives and if the fed prints so much money that the US dollar ends up devaluated and worthless ? The company by incurring income in other currency will get a fattier bottom line stated in US dollars and will offer, along with yield and growth at a ridiculous purchase price. Maybe in a time where money is called into question, a real company doing real stuff in a profitable way is a good thing to own. Gold do not give dividends.

We must agree, earnings are on the down, some companies post losses for the first time in decades and some other companies survival has already been compromised or is suspected to be sooner or later under the guillotine. Many are just affrait of the stock market and lose their cold blood when they assess securities offered for their real value. Others are burned and hold but won't buy more, to avoid sending good money after bad. To further accentuate the stock crash, margin calls and withdrawals from financial offerings such as hedge funds and mutual funds are peaking. This ends up in everything having been sold without any consideration about future cash flows and growth potential. What are these companies ? Everyone has its opinion about it, I will give mine later.

None can tell how long this will last and when will market participants regain their rational behavior, but someone can be confident than at a given moment, many big bargains currently available will start to go up again to a reasonable valuation level where it will still be adviseable to buy them. There is no trust now and this is why these bargains exist. The best time to invest is not when everyone is faithfully blind and buying anything at the highest possible price based on the highest possible earnings estimates and growth estimates. It is in the times like now when no one is buying for any of the million reasons of not buying. All is to be done is a serious analysis of the investment candidates to be sure to not enter in a falling one on a fundamental basis.

My companies which I deem to have good odds of
1) surviving the current mess not too scathed or unscathed at all
2) continue to deliver in a successful fashion superior products
3) resuming growth at a superior rate and on a global basis
4) acquire or conserve their leadership in their respective sector

are the following

AIB
ING
DB
MFC
IAG (Canada : Industrielle Alliance)
HMC
EXFO
INTC
NVDA
LYG
GE

The share price of these has gone down in a spectacular fashion
AIB -90%, NVDA once traded over 40$. EXFO 100$. Yet, their fundamentals are good, their financial strength is there and they all have leadership in their sector.

Anyways, there are as many successful picks possible as there are disciplined contrarian value investors so coming out with your picks is only a small part of the process and what is underlying it in the previous steps is a prerequisite for success and a much more big part of work on an analytical and behavioral basis.