If you had put in a market order to buy 1000 shares that evening, the order would have been executed the following morning at whatever asking price existed at that time. It could have been $80.99. You would be paying $1 per share more that the close the previous afternoon.
Our asset allocation has not changed in twenty-three years. It has been 100% allocated to common stocks. Prior to that, that is prior to the fall of 2002, we had been 100% in two-year government bonds for five years.
In 2024 our family’s retirement savings yielded a total return of 22.28%.
The professional money managers would have been further ahead to simply pick stocks from their portfolios at random to sell, rather than making the ‘human’ sell decisions they actually made. They should have used darts rather than their brains.
The question then becomes whether the market is simply slow to recognize the value in the company or whether the analyst was too optimistic in their estimate of fair value.
The S&P 500 price earnings ratio shot up to over 100 times earnings, a reflection of massive write offs and depressed earnings. In fact, there were outstanding values in the stock market at that time! It was a good time to be a buyer.
It got to a point a few weeks ago when AMAT’s price was some 60% above fair value. It struck me that the price reflected serious ‘irrational exuberance’.
Declining free cash flow may be a sign the company is investing for the future! Or it may be a very bad sign. Increasing free cash flow may be a good sign or a bad sign. It’s all in the interpretation of the financials.
What could be more advantageous in an intellectual contest – whether it be bridge, chess, or stock selection – than to have opponents who have been taught that thinking is a waste of energy?
The majority of investments are in intangible assets, including research and development, customer acquisition costs and branding. But companies commonly expense these investments on the income statement as they incur them.
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