Saul's Board

Investment Analysis Clubs Macro Economic Trends and Risks
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Hey Fellow Fools,

I’m pretty sure that there are some folks that post here that also post (or at least follow) the Saul board.

I was a holdout to jump on the Saul board as I lived through the 2002 tech debacle and really wanted to stay away from high risk tech stocks. However, after being on the sidelines for many years, I discussed with my wife to check out some of the stocks that the folks on the Saul board follow and do some research to see if we could jump on the Saul bandwagon with a very small number of shekels. I admit to envisioning a 50% in a short amount of time.

That was in mid-October.

We all know what has happened to the Saul stocks since mid-October. Most have been slammed.

We invested in one of Saul’s picks - UPST - Upstart, an AI lending platform that has had a great track record, had solid expansion plans in place and was executing against them. They claimed (and many agree) that their AI platform takes a lot of the “bias” out of the approval process which allows folks that are underserved in the credit market to get approved. I liked that story. They currently service the personal loan market, but are now expanding into the auto lending market. It is a great story.

Unfortunately, a great story and macro economics don’t always jive and UPST is down 65% since we bought. The Nasdaq has been taking a beating lately. (With more to come - I’m sure).

Again, this was a small position and I’m not losing sleep over it, but it just goes to show that VALUATION (the price that you pay for a given stock) matters.

I tried posting a similar post on Saul’s board twice now, and both posts have been yanked. I want to let folks know on this board that the Saul board is heavily censored and anyone who posts anything about valuation, about losing money, etc. will most likely have their post pulled.

I’m struggling to understand how this might be good for the folks who read the Fool and follow Saul. It’s easy to get lured into the “I made 50% in 2 months” or “This rocket ship is going to the Moon” when those are the only posts that remain on the board. Those folks are seeing only the “good” posts, not the posts that challenge the Saul way of thinking.

This is a new revelation to me. I thought the Fool was a platform where folks can have a balanced discussion about the topic at hand for each board. Never did I realize that there would be such “pruning” of posts that might give a balanced view. (This is different than what happens here on METaR with political posts - but I’m not going there).

So, the intent of this post is to:

  • let others on this board that may follow Saul’s board know that there’s some heavy censorship going on over there - which I was not aware of
  • remind folks that valuation does matter
  • only play with dollars that you are willing to lose in the short term (I’m willing to wait this one out - as I don’t need this cash)
  • invest for the long run - playing with fire usually means you’re gonna get burned…
  • OR -
  • get in early - not late :wink:

Hope this has been helpful to my friends here at METaR. Maybe not news to many, and the investing theme is not news to me either - but the Board censorship is something that was “news” to me. **

'38Packard
** If you go to Saul’s board and view the list of posts, you are pretty much guaranteed to see gaps in the post number sequence. Those gaps are deleted posts.

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Hi 38 :slightly_smiling_face:

There are two basic types of investors: value investors and growth investors. *

Valuation is THE FA metric for a value investor. “Growth” is much lower on the priority list.

Growth is THE FA metric for a growth investor. “Valuation” is much lower on the priority list.

Saul’s is a GROWTH INVESTING board. They specifically focus on GROWTH. and even more specifically on HYPER GROWTH.
Those guys got a tiger by the tail. Per the Saul philosophy, valuation has no useful meaning for FA of EXTREME growth stocks.

Saul’s BOARD RULES clearly state to NOT discuss “valuation”, and any such posts will be deleted. They are even more strict than METaR’s “no politics” rule.

Don’t take it personal. It’s not about you.
It’s a BOARD RULE, that applies to everybody, equally.

:+1: no insult intended to value investors.
ralph

  • Each investor type has its own specific goals which are all but exclusive of the other type.
    Each investor needs to understand her/his own investing goals (and risk tolerance), and pick the style that best fits those goals.
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Someone on that board recently posted that ignoring valuation the way they do is their biggest risk and akin to putting their head into the sand. That person is correct. Those guys are playing with fire and they have gotten away with it for about 3 years now, maybe 4. I strongly suspect this year will be the year they get burned.

While you cannot value a growth stock with the same metrics you do a value stock, valuation still matters, if for no other reason you are betting the stock value will go up with time. And if you buy too high it limits your profit potential. Those guys have drank their own kool aid.

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Those guys are playing with fire and they have gotten away with it for about 3 years now, maybe 4. I strongly suspect this year will be the year they get burned.

On the other hand, you may also want to consider Saul’s 35 year investing record.

Pete

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The foundation of the METAR board is an awareness of economic and investment history based in a knowledge of group psychology.

With great humility, it’s clear that a board which encourages (let alone enforces) a single point of view can lead to “information cascades” in which an individual can make a decision against their own personal judgment because of a group consensus.

https://en.wikipedia.org/wiki/Information_cascade

It’s a theory used in the field of behavioral economics and has important implications for financial markets. Recognizing and avoiding this behavior can help people make better financial decisions.

https://www.investopedia.com/articles/investing/052715/guide…

Historically, many bubbles have grown and popped due to the enthusiasm generated by information cascades. These are fun to read about and also cautionary.

https://www.amazon.com/Manias-Panics-Crashes-History-Financi…

https://www.amazon.com/This-Time-Different-Centuries-Financi…

The METAR Board explicitly invites all investing approaches, from the wildest bull to the gloomiest bear and all perspectives in between. In discussing the pros and cons of each approach, we develop a wider perspective and more knowledge.

The METAR Board also realizes that each investor is in a different situation in life and with different tolerance to risk. What is right for one may wrong for another. The important thing is to make data-based decisions – with full awareness that RISK means potential LOSS as well as potential gain.

Saul’s Board is very clear about their objectives. They aren’t shy about pulling posts that don’t conform to their views. If a post mentions valuation (which they reject for their type of stock) they will censor it. However, if a post thoroughly analyzes a company’s sales figures and concludes that it is no longer a high-growth stock and should be sold, it will be allowed. This is the discipline of the Saul method. Saul has made a lot of money this way and he’s sharing his technique.

Saul’s Board does not allow any discussion of Macroeconomics, even though rising interest rates will hit growth stocks especially hard. It’s a different philosophy that shows lack of historical perspective. Every bubble in the past had a great story that many people bought into, pushing valuations way past historical norms.

For more perspective, see https://www.hussmanfunds.com/comment/mc211120/

I respect Saul tremendously. His perspective and investment approach is opposite from mine, but that’s OK. Differences of opinion is what makes markets.

Wendy

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“Saul’s Board is very clear about their objectives. They aren’t shy about pulling posts that don’t conform to their views. If a post mentions valuation (which they reject for their type of stock) they will censor it.”

Yea, nope. Not buying it. He basically runs it as a pump and dump boiler room. Lots of posts pumping the latest high flying sales metrics but the minute a company hits a bump he’s out. There are too many horror stories of star struck newbies who piled into these “great companies” without a mention of how to value them. Hell, one honest poster recently acknowledged losing more than a million dollars after embarking on Saul’s strategy. Censoring fair criticism of this incredibly speculative investment method is malpractice. The Motley Fool could be liable if the right lawyer finds the right client in that room.

It smells like a gambler’s den to me. All sweat and adrenaline and oxytocin and tears. Mostly tears right now.

PP

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While you cannot value a growth stock with the same metrics you do a value stock, valuation still matters…

There is only one correct way to value any investment, and that is through (estimated) discounted cash flows. You can do that for any stock. The big trick, of course, is estimating the future cash flows (and the appropriate discount rate, both of which are affected by the topic of this METAR board). This exercise can be done even for an investment in a company that isn’t currently producing earnings.

That future cash flows may be highly uncertain for such a company is true but somewhat beside the point. One can determine what revenue growth rates and operating margins would be required over, say, the next 5 or 10 years in order to make the stock a good (risk-adjusted) value at its current price. Then the investment question boils down to the plausibility of those required outcomes. Morningstar analysts, for example, do this all the time. Of course, their estimates often turn out to be far from the mark.

At least a few people on Saul’s board discuss such things, more or less. Saul himself points broadly in this direction when he discusses such things as TAM (total addressable market), plausible future revenue paths, plausible operating margins, etc.

The central claim of that board (which mirrors that of TMF Rule Breakers) is that if you can figure out whether a fairly new company has a huge TAM in front of it and has some reasonably durable advantage in service, personnel, or (preferably) both, then if you buy the stock and hang on long enough, the cream will rise to the top. The corollary claim is that SAASy companies comprise unrivaled terrain for finding such opportunities.

I’ve never been able to do that. But I accept that a few folks have been able to do so fairly reliably. David Gardner is one. Saul may be another, although he does appear to piggyback on DG and a guy on SA (Bert H). But I’ve not been able to do that consistently, either.

Fungi (who is looking to pick up a few tasty scraps that are, or once were, on Saul’s table now that they’re getting hacked to pieces)

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Oxytocin is the loving, tend and befriend hormone. I don’t see a lot of that on Saul’s board.

I think you probably mean dopamine and/ or testosterone.
Wendy

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been at MF since 1997
dot com
2008

I am mostly in Vanguard, some in BRK and MKL.

some in Saul

You know, Saul posts EVERY SINGLE WEEK the purpose of his board. He posts links, he post cautions, he posts the rules. Saul’s Board is not for beginners, not for people who don’t know what a FCF is nor for the faint of heart. These issues are clearly stated, repeatedly (at least weekly). One of the issues is posting on topic. Posts are not deleted if there is a specific discussion about the valuation of a company. But, as he says, one doesn’t post about tacos on a French cooking board. But Saul’s Board does point out where tacos can be discussed.

I would say Saul’s disclaimers would hold up quite nicely in a court of law.

Or are you a fan of the weekly Motley Fool’s “Rare all in” posts?

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Saul doesn’t have to apologize for anything ! He is not selling anything, he is not doing
any sort of “pump & dump”, he explicitly states to not blindly follow what he does.
Do your own homework ( due diligence ), and live with the results. Know your own
personal risk tolerance, it almost certainly is different than Saul’s risk tolerance.

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Saul doesn’t have to apologize for anything ! … Know your own personal risk tolerance, it almost certainly is different than Saul’s risk tolerance

WOW

Here’s a chart of PTON a former Saul stock:

https://finance.yahoo.com/quote/PTON/chart?p=PTON#eyJpbnRlcn…

As you can see it was extremely time-dependent (rich people in lock-down), really not a growth stock at all.

**Octaazacubane** is predicted to have an energy density (assuming decomposition into N2) of 22.9 MJ/kg,[4] which is over 5 times the standard value of TNT...
https://en.wikipedia.org/wiki/Octaazacubane

Saul has a rare talent for juggling explosives. This is not something to be encouraged in the general population. There is a time premium in most of his stocks, and that decays quickly, faster even than the companies will run out of IPO money.

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I think you probably mean dopamine and/ or testosterone.

DOLLARine… :innocent:

The Captain
no longer posts at Saul’s but Saul’s record is fantastic.

The difficulty is that late comers buy at the top. Valuation, specially DCF, are quite useless for hyper-growth stocks. A better approach is to understand the business model and concepts like the “S” curve and the Technology Adoption Life Cycle [TALC]. David Skok has great videos to understand the SaaS model.

David Skok of Matrix Partners: Driving SaaS Success Using Key Metrics
https://www.youtube.com/watch?v=bCBccKfG9U0&t=197s

What many investors fail to understand is that stock prices tend to be correlated to the general market and that different classes of stocks (value, growth, safety, etc.) tend to rotate as market favorites. If a growth stock does not have a long term future then it’s a risky investment. Growth stocks are also extremely volatile and if you don’t have the stomach or other body parts able to deal with it, then don’t invest in growth.

My suggestion, if you are not a growth investor don’t post at Saul’s and specially don’t preach brimstone and hellfire because you are going to be deleted for good reason.

I have been expecting a correction for quite a long while but it was only in early December that I finally decided to be on the sidelines except for my high conviction stocks and it’s not over yet. Better late than broke so I’m just watching the market play out.

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Hi Ralph,

Thanks for the reply and clarification. I was aware that Saul’s board was tightly managed, but I also thought that a well-reasoned, objective post would not be yanked. I was wrong.

I’ll stick to my VALUE investing and leave the high flyers to those that can run with Saul!!

HNY!
'38Packard

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Hey RWRocks,

I’ve also been on the MF since 1998, You have me beat. I have also been through the dot com bust and the bust in 2008 as well. Not a newbie.

I get that the board rules are posted every week. Not sure if you saw my post before getting yanked, but I thought it would be a helpful post for those that are newbies - and you know there are TONS of newbies following Saul - just look at the number of recs that each post gets.

I was trying to be “Foolish” in posting “another side of the story” for others, sharing - that’s what TMF is all about.

'38Packard

  • Who is not aware of the MF’s “rare all in” posts.
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What I see here is a lot of off and on standards of conduct, depending on who is posting.

Lucky Dog

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Saul eats his own cooking. He has been a gifted stock picker over the past couple of years, picking stocks which were accelerated by the rather unique economic and psychological environment during the past two years.

That said, there is no shortage of other stock-picking models which have been highly successful, only to be deflated for one reason or another.

We each have the opportunity to place bets where we wish in the casino. Placing them on the same squares as the guy who’s hot can be very profitable - until it’s not.

This board is a good starting place to acquire the basis of thinking for yourself - and doubting the near-deity status given to those who are currently successful.

You are responsible for your money - handle those chips with care.

Jeff

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There are two basic types of investors: value investors and growth investors.

A third and arguably better type of investor is an index fund investor who just buys a bit of everything.

It is important to keep in mind that for at least 20 years, since the Dot Com crash, that the core reason that the Motley Fool website has existed was to sell any of about 40 stock picking services.

https://www.fool.com/services/

It has been years since I looked at any of them but I would assume that they are heavily into growth and momentum stocks and that the competing free information on Saul’s popular board is tolerated since they can pass on many of his recommendations to the people that are paying for subscriptions.

Way back in the 1990’s when the Fool was starting the story about how the “Motley Fool” got it’s name was that even a “fool” could beat the “wise” just by buying index funds or using a few simple strategies like the original “Foolish Four” or the “Dogs of the Dow”.

It is not surprising that trying to post information there on value investing was not well received since overall that is not the focus of the Motley Fool now. The METAR board is a bit of an aberration here, sort of like the lone salad on a menu at a fast food restaurant.

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“Saul has a rare talent for juggling explosives. This is not something to be encouraged in the general population. There is a time premium in most of his stocks, and that decays quickly, faster even than the companies will run out of IPO money”

Saul EXPLICITLY tells people to NOT blindly follow what he does. His asset allocation, to me,
is far beyond anything I can tolerate. As far as PTON, he dislikes companies that sell
hardware. and makes a pretty logical case for why he feels that way. Yes, PTON sells
software subscription services, but last time I looked you had to have 1 of their bikes to use
the services. I made some money on PTON, also left some on the table, as I sold after thinking
about their business model and how it would hold up after people started leaving their homes
for their exercise routines. Just seemed logical that sales would slow, and I never looked back
since then, so not even sure how it all unfolded.

This is the last I’ll post on this, his record and transparency speak for themselves.
He is not a financial service, he’s not getting paid to give people stock recs.
His board tries to be laser focused on hi-growth companies. It is all out in the open,
no surprises at all.

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This is the last I’ll post on this, his record and transparency speak for themselves.
He is not a financial service, he’s not getting paid to give people stock recs.
His board tries to be laser focused on hi-growth companies. It is all out in the open,
no surprises at all.

Yes!

I don’t get this ‘dump on Saul’s Board’ here. Yes, it is a tightly controlled board that I myself never post on since I don’t have the desire to spend a lot of time analyzing, then organizing, then writing posts on the various companies that Saul looks at. And I recognize that the board is not one to just cast random thoughts upon or ask for “today’s best stock” to invest in. That said, I have been fortunate to be able to view and use the information from his board over the years. Also, Saul has not been successful in the past couple years, but for the past few decades of investing. His record is not a temporary fluke. He is very transparent about what he has done in the past and what he is doing now.

It seems some people just want to post whatever they want, whenever they want, wherever they want. There are some places on TMF that are better than others for this. Not Saul’s board.

Pete

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MataroPete: I don’t get this ‘dump on Saul’s Board’ here.

I think I get part of it. .
It’s about not knowing one’s actual Risk Tolerancs.

:thinking:
ralph

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