Ownership in Some of the Best Businesses in the World is Starting to Look Very Attractive

About LondonI’ve only been writing since 2013 so I haven’t been able to go through blogging during a real market correction like in 2008. Some of the best businesses in the world are starting to look very attractive at fair-to-below-fair value. Coca Cola, Johnson & Johnson, Berkshire Hathaway, Exxon, Chevron, etc. – high quality large cap companies that should make the foundation and backbone of any investors’ portfolio. These are some of the greatest companies in the world, minting money year after year after year. This is the time to go pick up some ownership in these incredible businesses. They are sitting there at fair value, or less than fair value. Could prices drop even further? Sure they could: you should expect +30% declines in quoted market price of your holdings in the markets. But remember, price ≠ value. And in this world, getting fair value for ownership in some of the best businesses in the world is not some great tragedy in life.

13 thoughts on “Ownership in Some of the Best Businesses in the World is Starting to Look Very Attractive

  1. And a few of them I paid more for a couple months back. DOH! This was a great morning and I had about 3 I was seriously eyeing. This is why it’s a good idea to do some valuations ahead of time because when these type of miracles happen, its nice to be ready to hit the button.

    1. Timing the market is next to impossible. I bought an entertainment giant when their quarterly announcement regarding ESPN disappointed the street and shares tumbled. In hindsight, I should have waited even longer and I could have bought under a $100. But that’s all in hindsight and who could’ve predicted? I am happy with my purchase and will be buying more as long as it looks attractive relative to intrinsic value.

    1. I left this comment on a personal finance blog that was advocating trading forex or options as a side income activity:

      “Not to be a Debbie-Downer, but I’m fairly certain that *most* people should not be trading, especially forex, as they do not have the knowledge, experience, temperament, or advantage to do well.

      Even if they somehow managed to build up the first 2, the last 2 will kill em.

      The difficult thing about generalized investment advice is that you can’t be too specific unless you know an individual’s details, especially psychology and temperament. That doesn’t scale well.

      So you’re left with advice that boils down to: buy and hold the Vanguard S&P 500 index fund forever. Like Buffett advises. This isn’t what he would recommend necessarily to the enterprising young investor, but when left to do the least harm for the largest audience, investment advice can only be generic.

      In a nut shell, I don’t necessarily think trading is right or wrong advice, it’s just that in a general sense, *most* people are not psychologically and intellectually wired to succeed in that kind of endeavor.”

      I’m still in a dilemma about talking about any companies outside the ones most people know about (mega-cap) because, while there is more potential value to find in the small-micro caps, it’s not an area most people with limited investing knowledge should be foraging around in.

      Perhaps only talking about the mega-caps will lead people to want to self-educate themselves on finance/accounting/history/investing so at some point they are sufficiently armed with knowledge and confidence to approach the world outside the mega-cap playground.

      But perhaps I’m being naive.

      1. Well, in reality, the post you commented on was a “paid post/link” – the author probably received some money to put a link to a forex broker for a set amount of time.

        Back before 2012, a lot of sites were making thousands of dollars per year just placing links. I guess this is back in full force..

        1. I checked the links in the post and it seemed to have a vanilla link to a forex/options trading site so I didn’t think there was an affiliate link. This was from a Canadian personal finance blog. I think in all honesty they were just being sincere about some stuff you could do on the side to generate extra money, but I honestly don’t think forex/options trading is something someone who is “looking to generate side income” should be doing – they should stick to the ad nauseam repeated advice from all other bloggers which is to freelance write online. At least with that you don’t risk losing your shirt in a shark tank.

          I don’t know what to think about affiliate links. I have some myself and have generated some money from them (not much). All I can say is that it would make me highly uncomfortable loading up on affiliate links to forex/options sites vs. affiliate links to a web hosting site to start your own website.

          1. I wasn’t saying this was an affiliate link – this was likely a paid text link whose goal is to juice up the rankings of the forex broker in Google. E.g. If you link to my forex site from your site, my ranking probably increases in the eyes of Google. So when someone searches for a forex site, they are more likely to find me. Since I would likely value being seen as important in the eyes of google, I would likely pay you – $50, $100 or whatever it is they pay for that these days. Google actually hates paid links, since it is a way to game the system -so they are actively banning the practice.

            Full Disclosure: I do not own a forex site

          2. I was just having a BBQ with someone and the individual was asking me about investing, etc and I told them that I enjoy a mix of Value/Dividend Growth investing. IE, I look for large companies with long runs of dividend increases (not always) with business models I understand and annual reports I don’t have a big problem digging through. I prefer ones that are giant cash generating monsters relative to tangible assets with lots of cash to reinvest in the brand to keep them relevant. To me, nothing is more exciting than snagging Hershey for a good price. I can see them, everyday, competing out in the open! It’s awesome!

            This person has no prior investing experience but was starting to read books about “trading like a pro” and how options and currency trading could be done. I really got the feeling they thought I was grandpa, a relic investing in an old, dead form when there were surefire ways to do it now. It was a really strange feeling, but I do wish them the best success.

          3. I was at a party recently where a guy who has been trading in the markets since 2009 was talking to a small audience of my friends about his trading success.

            I had to bite my tongue so hard from saying “you’re bragging about success in a 6 year bull market? Anyone and everyone is a genius in a bull market – hell I made 26% return on my Vanguard Total US Market index fund from 2014-2015 but you don’t see me going off about it. You could have bought an S&P 500 index fund in 2009, did nothing but sit on your ass for the next 6 years and would have made ~17% returns.”

            Alas, I just politely nodded my head as I didn’t want to be “that guy” and risk never getting invited to a party again.

          4. So funny and how true. Unless you’ve lived through the cycle a bit, you really don’t realize that (at just under 30 I have not, really)

          5. The funny part though is that only in retrospect does it look like a no brainer that you could have simply bought VTI in 2009 and just sat tight. Hindsight is always 20/20.

            In reality, it was scary to invest in 2008 – 2009. Not everyone invested at the time, and many were bearish/out of the markets for a long time. We have had a lot of problems – fears of double dip recessions ( EU got it, but US didn’t), increasing taxes on dividends, end of QE, gvt shutdowns, etc. Now it is getting scary to invest again…

          6. Yes and no. For me personally, a huge collapse in the markets like in 2008-2009 would have been a signal that it was time to buy. For someone else, they might have been scared into inaction. Depends on the person. I should have clarified as I was talking about myself and how I think, not how most average people think about the markets.

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