Aaron, these are great names and concepts. I'm sorry I don't have the bandwidth to dive in deeper to each of these today, but this is very much how I think about modern value investing.
I actually really appreciate that there are others who have arrived at the same conclusion as me. Value Investing is truly something special. Would love to hear more about your perspective at your convenience!
The main thing, though, is that there's not like a "value or growth" investor mindset; that growth belongs as a part of the value equation, and that there are plenty of other silly misconceptions about stuff like book value and so on. Those things have evolved a lot, or rather the way we interpret how they affect a moat and so on have evolved, but value is still value.
Thanks! Good read. And yes, this is something that a lot of people misunderstand about value investing. It's not value factor vs. growth factor, it's investing in value!
Let's keep the conversation going by way of me commenting on these from time to time. Happy to have a few little exchanges like this, and I'm glad you're putting good info out there!
If you're interested in collaborating in the future, let me know. I do have some appetite for stuff like this, but my own substack has sort of taken over a lot of my ability to write about finance and such. It's not the right audience, but if you'd be interested in me contributing a little to a piece, I might be able to help out. Just putting that out there!
Meantime, I'm happy to dive into these when I can, and I'm glad you're here.
Reading your articles has really inspired me to start my own free Substack. I love discussing topics on value investing and really appreciate your work!
> NVDIA’s valuation today sports a trailing PE ratio in excess of 100x — which implies a 1% earnings yield. Now of course, there are people saying that it can grow its earnings by 30% CAGR. However, that would still imply that it would take over 6 years just to catch up with the current 5% yield of a 3-month Treasury bill, or 12 years to catch up to the 10% yield of a stock trading at 10x PE.
Sorry, I'm new to this. How does this calculation work?
Aaron, these are great names and concepts. I'm sorry I don't have the bandwidth to dive in deeper to each of these today, but this is very much how I think about modern value investing.
I actually really appreciate that there are others who have arrived at the same conclusion as me. Value Investing is truly something special. Would love to hear more about your perspective at your convenience!
In lieu of free time, I do have some stuff written down. Some of it is legible: https://toughnickel.com/personal-finance/Value-Investors-How-to-Think-About-Growth
The main thing, though, is that there's not like a "value or growth" investor mindset; that growth belongs as a part of the value equation, and that there are plenty of other silly misconceptions about stuff like book value and so on. Those things have evolved a lot, or rather the way we interpret how they affect a moat and so on have evolved, but value is still value.
Thanks! Good read. And yes, this is something that a lot of people misunderstand about value investing. It's not value factor vs. growth factor, it's investing in value!
Let's keep the conversation going by way of me commenting on these from time to time. Happy to have a few little exchanges like this, and I'm glad you're putting good info out there!
Yes please do, and thanks! Just doing my part for the value investing community!
If you're interested in collaborating in the future, let me know. I do have some appetite for stuff like this, but my own substack has sort of taken over a lot of my ability to write about finance and such. It's not the right audience, but if you'd be interested in me contributing a little to a piece, I might be able to help out. Just putting that out there!
Meantime, I'm happy to dive into these when I can, and I'm glad you're here.
Reading your articles has really inspired me to start my own free Substack. I love discussing topics on value investing and really appreciate your work!
Thank you. I've had a look at your Substack, you have some great insight to share! What's your background? Have you invested professionally before?
> NVDIA’s valuation today sports a trailing PE ratio in excess of 100x — which implies a 1% earnings yield. Now of course, there are people saying that it can grow its earnings by 30% CAGR. However, that would still imply that it would take over 6 years just to catch up with the current 5% yield of a 3-month Treasury bill, or 12 years to catch up to the 10% yield of a stock trading at 10x PE.
Sorry, I'm new to this. How does this calculation work?
1% x (1.3^6) = 4.83%
Sorry the second example should've been 9 years, not 12 years:
1% x (1.3^9) = 10.6%