Misconceptions

Reading the posts here, I am struck by a near-universal misconception; that the companies revealed by Saul’s process are low risk. There is wailing and gnashing of teeth when they go down. But they are usually in fields which make them wide-open to risk.

SWKS and AMBA are fine example of what I mean. They were companies which satisfied all my requirements for the figures. (SWKS still does, except for RS.) But look at the field they are in! It is ipso facto dangerous. Such companies are well-worth investing in, but only with the utmost cynicism. You top-slice and do not fail tr have a trailing mental stop-loss on momentum. This is technology we’re dealing with. BOFI the same, worth a punt, like the horses, but Oh Lord. And it’s a bank! Solar power? Give me a break!

SKX looked like the genuine article. Maybe it is. But it fails my screen and did before on deployment of cash flow relative to FCF. I should have been more cautious than I was.

The essence of investing is being demanding over the features, and the history of those features found in great companies. PEG does not reveal them. It is only a useful value measure for small caps. which are risky anyway.

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Hi Strelna,

They were companies which satisfied all my requirements for the figures.

and

But it fails my screen and did before on deployment of cash flow relative to FCF

I agree that the stocks found by the various flavors of the PEG screens can be risky. Care to share your stock requirements and screening method, or if you have already posted elsewhere, provide a link? I am always interested in methods used by other investors to cull the wheat from the chaff.

DT

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