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buy and never sell great businesses
Rank: Member Joined: 5/14/2014 Posts: 288 Location: nairobi
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After reading many books on investments,especially on munger and my own experience i now dont see the need for selling stocks of a business that has a relatively high ROE and expected continous high growth in EPS. 1. i bought centum at 13 then sold ar 20.bought at 24 sold at 35.then the other day i bought at 37.realy whats the point if paying all the transaction costs? 2.i have traded other stocks and paid unnecessary expenses not to mention market timing challenges. bottom line is if you are able to identify a stock that compounds at a constitently high roe eg equity,centum,britam then theres no point in trading/watching the nse I find satisfaction in owning great business,not trading them
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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target1360 wrote:After reading many books on investments,especially on munger and my own experience i now dont see the need for selling stocks of a business that has a relatively high ROE and expected continous high growth in EPS.
1. i bought centum at 13 then sold ar 20.bought at 24 sold at 35.then the other day i bought at 37.realy whats the point if paying all the transaction costs?
2.i have traded other stocks and paid unnecessary expenses not to mention market timing challenges.
bottom line is if you are able to identify a stock that compounds at a constitently high roe eg equity,centum,britam then theres no point in trading/watching the nse Change that to "buy undervalued stocks and sell overvalued stocks". Centum's NAV is around 26. It makee sense to buy at 13 and at 24 but buying at 37 exposes you to a loss in real terms. Life is short. Live passionately.
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Rank: Member Joined: 11/15/2010 Posts: 454 Location: Nairobi
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sparkly wrote:target1360 wrote:After reading many books on investments,especially on munger and my own experience i now dont see the need for selling stocks of a business that has a relatively high ROE and expected continous high growth in EPS.
1. i bought centum at 13 then sold ar 20.bought at 24 sold at 35.then the other day i bought at 37.realy whats the point if paying all the transaction costs?
2.i have traded other stocks and paid unnecessary expenses not to mention market timing challenges.
bottom line is if you are able to identify a stock that compounds at a constitently high roe eg equity,centum,britam then theres no point in trading/watching the nse Change that to "buy undervalued stocks and sell overvalued stocks". Centum's NAV is around 26. It makee sense to buy at 13 and at 24 but buying at 37 exposes you to a loss in real terms. @Sparkly, Thanks for your insight about NAV, if you can advise any resource where we can easily access stocks NAV. ....He who began a good work in you will carry it on to completion..
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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tinker wrote:sparkly wrote:target1360 wrote:After reading many books on investments,especially on munger and my own experience i now dont see the need for selling stocks of a business that has a relatively high ROE and expected continous high growth in EPS.
1. i bought centum at 13 then sold ar 20.bought at 24 sold at 35.then the other day i bought at 37.realy whats the point if paying all the transaction costs?
2.i have traded other stocks and paid unnecessary expenses not to mention market timing challenges.
bottom line is if you are able to identify a stock that compounds at a constitently high roe eg equity,centum,britam then theres no point in trading/watching the nse Change that to "buy undervalued stocks and sell overvalued stocks". Centum's NAV is around 26. It makee sense to buy at 13 and at 24 but buying at 37 exposes you to a loss in real terms. @Sparkly, Thanks for your insight about NAV, if you can advise any resource where we can easily access stocks NAV. @Tinker NAV can be computed from the balance sheet. Assets (minus) liabilities (devide by) number of shares. Requires some basic knowledge of accounts. Life is short. Live passionately.
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Rank: Member Joined: 8/14/2009 Posts: 244
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sparkly wrote:tinker wrote:sparkly wrote:target1360 wrote:After reading many books on investments,especially on munger and my own experience i now dont see the need for selling stocks of a business that has a relatively high ROE and expected continous high growth in EPS.
1. i bought centum at 13 then sold ar 20.bought at 24 sold at 35.then the other day i bought at 37.realy whats the point if paying all the transaction costs?
2.i have traded other stocks and paid unnecessary expenses not to mention market timing challenges.
bottom line is if you are able to identify a stock that compounds at a constitently high roe eg equity,centum,britam then theres no point in trading/watching the nse Change that to "buy undervalued stocks and sell overvalued stocks". Centum's NAV is around 26. It makee sense to buy at 13 and at 24 but buying at 37 exposes you to a loss in real terms. @Sparkly, Thanks for your insight about NAV, if you can advise any resource where we can easily access stocks NAV. @Tinker NAV can be computed from the balance sheet. Assets (minus) liabilities (devide by) number of shares. Requires some basic knowledge of accounts.
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Rank: Member Joined: 8/14/2009 Posts: 244
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In the balance sheet, assets=liabilities. Subtracting assets from liabilities gives you zero.
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Rank: Member Joined: 5/14/2014 Posts: 288 Location: nairobi
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sparkly wrote:target1360 wrote:After reading many books on investments,especially on munger and my own experience i now dont see the need for selling stocks of a business that has a relatively high ROE and expected continous high growth in EPS.
1. i bought centum at 13 then sold ar 20.bought at 24 sold at 35.then the other day i bought at 37.realy whats the point if paying all the transaction costs?
2.i have traded other stocks and paid unnecessary expenses not to mention market timing challenges.
bottom line is if you are able to identify a stock that compounds at a constitently high roe eg equity,centum,britam then theres no point in trading/watching the nse Change that to "buy undervalued stocks and sell overvalued stocks". Centum's NAV is around 26. It makee sense to buy at 13 and at 24 but buying at 37 exposes you to a loss in real terms. @sparkly thank you for the insight which i nappreciate but i have learnt to assign very little weight to NAV.For instance olympia has a NAV of over 20 but am sure you wouldnt recomend it. Also consinder an instance where at a given time two companies hav an equal NAV but one grows its earnings/NAV at 35% while the other grows at say 5% one might buy an investment company at a premium to the NAV where one has certainty that he wil very soon compensated for the premium by the fast growth of the business. price is what you pay and value is what you get. I find satisfaction in owning great business,not trading them
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Rank: Member Joined: 5/14/2014 Posts: 288 Location: nairobi
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stock.enigma wrote:In the balance sheet, assets=liabilities. Subtracting assets from liabilities gives you zero.  Assets=capital+liabilities NAV =assets-liabilities=~capital NAV is simply what a business owner would be left with after liquadating his business and paying off all debts. I find satisfaction in owning great business,not trading them
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Rank: Elder Joined: 7/11/2012 Posts: 5,222
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target1360 wrote:After reading many books on investments,especially on munger and my own experience i now dont see the need for selling stocks of a business that has a relatively high ROE and expected continous high growth in EPS.
1. i bought centum at 13 then sold ar 20.bought at 24 sold at 35.then the other day i bought at 37.realy whats the point if paying all the transaction costs?
2.i have traded other stocks and paid unnecessary expenses not to mention market timing challenges.
bottom line is if you are able to identify a stock that compounds at a constitently high roe eg equity,centum,britam then theres no point in trading/watching the nse And whathappens if the market crashes? Or there is an expected correction, where the price is bound to go below your purchase price?
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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target1360 wrote:sparkly wrote:target1360 wrote:After reading many books on investments,especially on munger and my own experience i now dont see the need for selling stocks of a business that has a relatively high ROE and expected continous high growth in EPS.
1. i bought centum at 13 then sold ar 20.bought at 24 sold at 35.then the other day i bought at 37.realy whats the point if paying all the transaction costs?
2.i have traded other stocks and paid unnecessary expenses not to mention market timing challenges.
bottom line is if you are able to identify a stock that compounds at a constitently high roe eg equity,centum,britam then theres no point in trading/watching the nse Change that to "buy undervalued stocks and sell overvalued stocks". Centum's NAV is around 26. It makee sense to buy at 13 and at 24 but buying at 37 exposes you to a loss in real terms. @sparkly thank you for the insight which i nappreciate but i have learnt to assign very little weight to NAV.For instance olympia has a NAV of over 20 but am sure you wouldnt recomend it. Also consinder an instance where at a given time two companies hav an equal NAV but one grows its earnings/NAV at 35% while the other grows at say 5% one might buy an investment company at a premium to the NAV where one has certainty that he wil very soon compensated for the premium by the fast growth of the business. price is what you pay and value is what you get. @target1360 growth is simply a promise. It may happen or not happen, but of course the key world is value. If a fast growth company is selling at less than its intrinsic value then buy. Life is short. Live passionately.
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Rank: Elder Joined: 7/11/2010 Posts: 5,040
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this is what young was preaching on wazua and I too have been preaching. @sparkly. Ben Graham taught us the buy undervalued and sell overvalued. Buffet perfected it by buying great relatively undervalued well run with top notch trustworthy management and never selling The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Member Joined: 5/14/2014 Posts: 288 Location: nairobi
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Mukiri wrote:target1360 wrote:After reading many books on investments,especially on munger and my own experience i now dont see the need for selling stocks of a business that has a relatively high ROE and expected continous high growth in EPS.
1. i bought centum at 13 then sold ar 20.bought at 24 sold at 35.then the other day i bought at 37.realy whats the point if paying all the transaction costs?
2.i have traded other stocks and paid unnecessary expenses not to mention market timing challenges.
bottom line is if you are able to identify a stock that compounds at a constitently high roe eg equity,centum,britam then theres no point in trading/watching the nse And whathappens if the market crashes? Or there is an expected correction, where the price is bound to go below your purchase price? @mukiri assuming you bought a farm at say 1 million.The farm productivity is satisfactory to you. then two years down the line everyone says that the most they d buy the farm is a half a million.would you panick and sell off the farm just because of that? The point is to ignore the noise of the emotional stock market so long as the economics of the underlying business are intact I find satisfaction in owning great business,not trading them
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Rank: New-farer Joined: 12/31/2011 Posts: 11
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stock.enigma wrote:In the balance sheet, assets=liabilities. Subtracting assets from liabilities gives you zero. Assets = Liabilities + Capital
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Rank: Member Joined: 6/15/2013 Posts: 301
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@a guy trying...how about equity which is fairly valued at 41.00 in the banking industry but potential for growth is high if telecoms/mobile money etc works. In your opinion would buffet rules apply I.e buy low sell high cause Equity is definitely not cheap at the moment
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Rank: New-farer Joined: 7/28/2013 Posts: 12 Location: Nairobi
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mulla wrote:@a guy trying...how about equity which is fairly valued at 41.00 in the banking industry but potential for growth is high if telecoms/mobile money etc works. In your opinion would buffet rules apply I.e buy low sell high cause Equity is definitely not cheap at the moment According to buffet, You would be speculating not investing because the price is already dear. Furthermore, physical growth of the company doesnt necessarily mean the earnings will grow.
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Rank: Member Joined: 1/15/2010 Posts: 625
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In my opinion, NAV is a useful indicator but should not be the only criteria. We've got a lot of discounted stocks esp in the agricultural sector on the NSE which are asset rich but earnings poor. In order to realize the value of your purchase you have to wait for an asset sale event such as with Rea Vipingo. The quality of management, earnings growth record are equally important. Even on the global scale, we've got a lot of countries with huge assets esp in Africa but they are unable to take advantage of them because of poor management. Japan which is very physical asset poor still manages to outperform. It's always important to understand the rationale behind a theory than to copy paste without giving it some context.
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Rank: Elder Joined: 7/11/2010 Posts: 5,040
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mulla wrote:@a guy trying...how about equity which is fairly valued at 41.00 in the banking industry but potential for growth is high if telecoms/mobile money etc works. In your opinion would buffet rules apply I.e buy low sell high cause Equity is definitely not cheap at the moment First of all buffet buys... and DOESN'T sell. Secondly equity is OVERVALUED. P/B must be approaching 3 if not 4. It fits all the criteria expect that its overvalued. I too will wait for it one day if mr market reduces to asking price to a more reasonable level The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Member Joined: 1/13/2014 Posts: 386 Location: Denmark
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In view of this thread I'd love if we shared some of the currently undervalued companies with massive potential for growth. A good example to start with would be KPLC and KQ(I know this is debatable but I still believe there's great potential if project mawingu is something to go by) Seeing is believing
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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jawgey wrote:In view of this thread I'd love if we shared some of the currently undervalued companies with massive potential for growth. A good example to start with would be KPLC and KQ(I know this is debatable but I still believe there's great potential if project mawingu is something to go by) 1. Unaitas 2. C&G 3. Kenya re Mark 12:29
Deuteronomy 4:16
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Rank: Member Joined: 5/14/2014 Posts: 288 Location: nairobi
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guru267 wrote:jawgey wrote:In view of this thread I'd love if we shared some of the currently undervalued companies with massive potential for growth. A good example to start with would be KPLC and KQ(I know this is debatable but I still believe there's great potential if project mawingu is something to go by) 1. Unaitas 2. C&G 3. Kenya re @guru what do you think of Total kenya. I find satisfaction in owning great business,not trading them
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