Fund/ETF for undervalued stock

Shocking_Blue

MaxiRobriguez said:

Shocking_Blue said:

MaxiRobriguez said:

Shocking_Blue said:

MaxiRobriguez said:

Passive "value" investing is going to see you invested in utter dogs who are cheap for a reason.

If you want to get into the value game, either find an active fund or do it yourself. But be warned, value investing has significantly underperformed growth investing for a number of years now and despite repeated "it will turn around soon" for the last half decade, COVID impact has increased the disparity between the two styles rather than brought them closer together.

Personally I like to find blends of the two. Buy a growth company when it's been knocked back a bit (f.e Boohoo) or buy a value stock when growth prospects look intriguing (f.e Prudential). The only proper value stock I hold at the moment is MnG.

Thanks.
I'm certainly not going to jump in and would only ever dabble, but I am keeping an eye on a handful of stocks that have crashed this year, trying to decide when they've bottomed out. Know this is probably incredibly naive, but I'm not going to throw £ at something until I feel it's a calculated decision.

The trick is to work out why they have crashed and whether that level of sell off is justified. Not all value/crashed stocks are a bargain - some sell-offs are occurring because the business is either impacted by certain events or it's just had a torrid time of late for their own reasons, which ends up making the stock by typical measurement expensive.

It's not easy to identify good value stocks, and requires patience and resolve in your decision making. It's been far easier and more profitable in recent years just buying mega cap/tech, who knows when that will change. 

Thanks.
This is the sort of info that I'm generally pointing to:
https://www.morningstar.co.uk/uk/news/204527/10-undervalued-uk-stocks.aspx

BAT/Imperial: Relies on non-developed markets continuing to smoke in large numbers. Not guaranteed. Forex risk. Large play in vaping, but if vaping ends up the same way as smoking scientifically speaking at least, then market is limited.
HSBC/Lloyds: Not paying dividends currently. Could be global negative interest rates imminently which would weigh on profitability. COVID not done with yet, businesses getting less support from governments may go to the wall in greater numbers causing more bad debts for banks.
BP/RDS - Much sunken cost in fossil fuel investment. More nimble energy companies utilising new-tech renewables could disrupt. 
BT - Needs to overhaul their infrastructure across the country and is saddled with debt/pension requirements.

Don't know enough about advertising/defence industries to pass comment on WPP and Meggitt. 

Out of that list I already own BT but I'm not massively fond on it and have considered swallowing the losses already incurred since I bought it. HSBC is on my watchlist but a long way from actual purchase yet. 

Besides practically all of these are high up the FTSE100, so you'd probably find it cheaper to just buy a FTSE100 tracker and you'd get similar returns. 

Thanks for such a specific response.
The FTSE tracker might be an idea. Had read around BPs movement towards green/clean energy, and bearing in mind their size thought they would have been able to respond to changes in energy. Also had a couple of green/cleans lined up as potential satellite funds for small amounts:
Ishares Global clean energy (INRG) 
FP Foresight Global Real Infrastructure

Did think BP was a serious potential value buy, though, along with Lloyds (Cineworld?).

Moe_The_Bartender

MaxiRobriguez said:

Passive "value" investing is going to see you invested in utter dogs who are cheap for a reason.

And COVID has done much to expose them. As Buffet said 'you only see those who are swimming naked when the tide goes out'

Value is an outdated concept which worked before the internet became ubiquitous. Managers who had an edge because they had information not available to the public at large no longer do so. Tom Dobell is a classic example. It's taken ten years of dismal performance for M&G to dump him.

AnotherJoe

Shocking_Blue said:

MaxiRobriguez said:

Passive "value" investing is going to see you invested in utter dogs who are cheap for a reason.

If you want to get into the value game, either find an active fund or do it yourself. But be warned, value investing has significantly underperformed growth investing for a number of years now and despite repeated "it will turn around soon" for the last half decade, COVID impact has increased the disparity between the two styles rather than brought them closer together.

Personally I like to find blends of the two. Buy a growth company when it's been knocked back a bit (f.e Boohoo) or buy a value stock when growth prospects look intriguing (f.e Prudential). The only proper value stock I hold at the moment is MnG.

Thanks.
I'm certainly not going to jump in and would only ever dabble, but I am keeping an eye on a handful of stocks that have crashed this year, trying to decide when they've bottomed out. Know this is probably incredibly naive, but I'm not going to throw £ at something until I feel it's a calculated decision.

IMHO it is (depending why they crashed*)

For many, the bottom will be much lower than now and for some zero.

There's an inherent assumption in your statement (about bottoming out, eg "when" they bottom out) that such shares will then rise up again, perhaps to where they were. But maybe they are a falling knife destined to stick themselves in the floor and you'll get cut trying to catch them.

* TBF I made a fair bit of money immediately after the Brexit vote doing what you are planning, by buying housebuilders that had taken a big hit, on the grounds the market had overreacted and that British people would still like to live in houses, Brexit or no Brexit. However many of the current falls are fundamental,  based on changes of business that are structural. I dont see airlines recovering any time soon for example not restaurants groups, nor oil companies, nor property businesses that manage malls and the like.

AnotherJoe

MaxiRobriguez said:

Out of that list I already own BT but I'm not massively fond on it and have considered swallowing the losses already incurred since I bought it. 

Dump it*. Buy SMT. You can buy me a very nice meal as a reward in a couple of years time. You're welcome

* Its not a company. It's a pension fund that happens to own a small telco.

Shocking_Blue

AnotherJoe said:

Shocking_Blue said:

MaxiRobriguez said:

Passive "value" investing is going to see you invested in utter dogs who are cheap for a reason.

If you want to get into the value game, either find an active fund or do it yourself. But be warned, value investing has significantly underperformed growth investing for a number of years now and despite repeated "it will turn around soon" for the last half decade, COVID impact has increased the disparity between the two styles rather than brought them closer together.

Personally I like to find blends of the two. Buy a growth company when it's been knocked back a bit (f.e Boohoo) or buy a value stock when growth prospects look intriguing (f.e Prudential). The only proper value stock I hold at the moment is MnG.

Thanks.
I'm certainly not going to jump in and would only ever dabble, but I am keeping an eye on a handful of stocks that have crashed this year, trying to decide when they've bottomed out. Know this is probably incredibly naive, but I'm not going to throw £ at something until I feel it's a calculated decision.

IMHO it is (depending why they crashed*)

For many, the bottom will be much lower than now and for some zero.

There's an inherent assumption in your statement (about bottoming out, eg "when" they bottom out) that such shares will then rise up again, perhaps to where they were. But maybe they are a falling knife destined to stick themselves in the floor and you'll get cut trying to catch them.

* TBF I made a fair bit of money immediately after the Brexit vote doing what you are planning, by buying housebuilders that had taken a big hit, on the grounds the market had overreacted and that British people would still like to live in houses, Brexit or no Brexit. However many of the current falls are fundamental,  based on changes of business that are structural. I dont see airlines recovering any time soon for example not restaurants groups, nor oil companies, nor property businesses that manage malls and the like.

But Another Joe, they (stocks I'm referring to) will bottom out, and will rise, won't they? I know what you're saying about fundamentals and structure, but the cos will surely respond to this. I also believe however that they are still going to fall as covid continues, so I wouldn't jump in anytime soon.

Shocking_Blue

Moe_The_Bartender said:

MaxiRobriguez said:

Passive "value" investing is going to see you invested in utter dogs who are cheap for a reason.

And COVID has done much to expose them. As Buffet said 'you only see those who are swimming naked when the tide goes out'

Value is an outdated concept which worked before the internet became ubiquitous. Managers who had an edge because they had information not available to the public at large no longer do so. Tom Dobell is a classic example. It's taken ten years of dismal performance for M&G to dump him.

Information available to the public at large is a wonderful thing (this forum being a case on point). I don't think that necessarily negates value - just democratises it.

MaxiRobriguez

Shocking_Blue said:

AnotherJoe said:

Shocking_Blue said:

MaxiRobriguez said:

Passive "value" investing is going to see you invested in utter dogs who are cheap for a reason.

If you want to get into the value game, either find an active fund or do it yourself. But be warned, value investing has significantly underperformed growth investing for a number of years now and despite repeated "it will turn around soon" for the last half decade, COVID impact has increased the disparity between the two styles rather than brought them closer together.

Personally I like to find blends of the two. Buy a growth company when it's been knocked back a bit (f.e Boohoo) or buy a value stock when growth prospects look intriguing (f.e Prudential). The only proper value stock I hold at the moment is MnG.

Thanks.
I'm certainly not going to jump in and would only ever dabble, but I am keeping an eye on a handful of stocks that have crashed this year, trying to decide when they've bottomed out. Know this is probably incredibly naive, but I'm not going to throw £ at something until I feel it's a calculated decision.

IMHO it is (depending why they crashed*)

For many, the bottom will be much lower than now and for some zero.

There's an inherent assumption in your statement (about bottoming out, eg "when" they bottom out) that such shares will then rise up again, perhaps to where they were. But maybe they are a falling knife destined to stick themselves in the floor and you'll get cut trying to catch them.

* TBF I made a fair bit of money immediately after the Brexit vote doing what you are planning, by buying housebuilders that had taken a big hit, on the grounds the market had overreacted and that British people would still like to live in houses, Brexit or no Brexit. However many of the current falls are fundamental,  based on changes of business that are structural. I dont see airlines recovering any time soon for example not restaurants groups, nor oil companies, nor property businesses that manage malls and the like.

But Another Joe, they (stocks I'm referring to) will bottom out, and will rise, won't they? 

Not necessarily. 

Companies particularly hard hit could go to the wall and your stocks become worthless. Companies like Cineworld might be in this boat for example if there is no return of customers for months or years.

You may find companies that don't go to the wall suffer from technological/societal changes which means their business model is no longer as safe as it used to be. They may struggle to grow revenues or cut costs whereas more nimble competitors find it easier and start to take market share. In that case, the stock price after crashing may just stay flat for a bit - and whilst you don't lose money, you lose the opportunity gains that you could have realised if you invested in these other companies.

I think the thing people are trying to say is that it's quite difficult to pick out a truly undervalued company. Even those that offer a wide margin of safety doesn't mean you will be almost guaranteed to make gains, it just lowers chances of further losses.

HSBC is in your 10 value stock lists, but it's currently cheaper than it was in the depths of 2009, and any investor who bought HSBC shares between September 2003 and 2008 has never once had even the chance to sell at a gain since.

MaxiRobriguez

Not to put you off this approach either, as it could well be profitable in the years to come if there's a sentiment rotation from growth to value. Just want to be clear that it's not *certain* that buying beaten down stocks is a sure why way to money because stocks always recover. Some don't, some never recover. That's the risk you play, but the risk can pay off spectacularly if you make the right bet.

It's much easier for novices to just park their money in a global index tracker and forget about it. You then get expose to growth, value and everything inbetween, and get diversification across multiple countries too. It's nice because you personally cannot make a mistake - the only way you lose money is if world markets stutter (in which case, your "value" plays are probably sliding too anyway).

Shocking_Blue

MaxiRobriguez said:

Shocking_Blue said:

AnotherJoe said:

Shocking_Blue said:

MaxiRobriguez said:

Passive "value" investing is going to see you invested in utter dogs who are cheap for a reason.

If you want to get into the value game, either find an active fund or do it yourself. But be warned, value investing has significantly underperformed growth investing for a number of years now and despite repeated "it will turn around soon" for the last half decade, COVID impact has increased the disparity between the two styles rather than brought them closer together.

Personally I like to find blends of the two. Buy a growth company when it's been knocked back a bit (f.e Boohoo) or buy a value stock when growth prospects look intriguing (f.e Prudential). The only proper value stock I hold at the moment is MnG.

Thanks.
I'm certainly not going to jump in and would only ever dabble, but I am keeping an eye on a handful of stocks that have crashed this year, trying to decide when they've bottomed out. Know this is probably incredibly naive, but I'm not going to throw £ at something until I feel it's a calculated decision.

IMHO it is (depending why they crashed*)

For many, the bottom will be much lower than now and for some zero.

There's an inherent assumption in your statement (about bottoming out, eg "when" they bottom out) that such shares will then rise up again, perhaps to where they were. But maybe they are a falling knife destined to stick themselves in the floor and you'll get cut trying to catch them.

* TBF I made a fair bit of money immediately after the Brexit vote doing what you are planning, by buying housebuilders that had taken a big hit, on the grounds the market had overreacted and that British people would still like to live in houses, Brexit or no Brexit. However many of the current falls are fundamental,  based on changes of business that are structural. I dont see airlines recovering any time soon for example not restaurants groups, nor oil companies, nor property businesses that manage malls and the like.

But Another Joe, they (stocks I'm referring to) will bottom out, and will rise, won't they? 

Not necessarily. 

Companies particularly hard hit could go to the wall and your stocks become worthless. Companies like Cineworld might be in this boat for example if there is no return of customers for months or years.

You may find companies that don't go to the wall suffer from technological/societal changes which means their business model is no longer as safe as it used to be. They may struggle to grow revenues or cut costs whereas more nimble competitors find it easier and start to take market share. In that case, the stock price after crashing may just stay flat for a bit - and whilst you don't lose money, you lose the opportunity gains that you could have realised if you invested in these other companies.

I think the thing people are trying to say is that it's quite difficult to pick out a truly undervalued company. Even those that offer a wide margin of safety doesn't mean you will be almost guaranteed to make gains, it just lowers chances of further losses.

HSBC is in your 10 value stock lists, but it's currently cheaper than it was in the depths of 2009, and any investor who bought HSBC shares between September 2003 and 2008 has never once had even the chance to sell at a gain since.

Fair enough (Cineworld might be one to avoid in any case). I guess the situation isn't helped by sites like Morning Star and Motley Fool (respected sources of info for Joe Public) pitching the likes of BP as potential value buys. Just hard to believe that a co the size of BP would be out footed (no matter how nimble they are) by smaller cos. Will have a re-think, though, in light of the prevailing sentiment in the replies to my post.

LHW99

Shocking_Blue said:

MaxiRobriguez said:

Shocking_Blue said:

AnotherJoe said:

Shocking_Blue said:

MaxiRobriguez said:

Passive "value" investing is going to see you invested in utter dogs who are cheap for a reason.

If you want to get into the value game, either find an active fund or do it yourself. But be warned, value investing has significantly underperformed growth investing for a number of years now and despite repeated "it will turn around soon" for the last half decade, COVID impact has increased the disparity between the two styles rather than brought them closer together.

Personally I like to find blends of the two. Buy a growth company when it's been knocked back a bit (f.e Boohoo) or buy a value stock when growth prospects look intriguing (f.e Prudential). The only proper value stock I hold at the moment is MnG.

Thanks.
I'm certainly not going to jump in and would only ever dabble, but I am keeping an eye on a handful of stocks that have crashed this year, trying to decide when they've bottomed out. Know this is probably incredibly naive, but I'm not going to throw £ at something until I feel it's a calculated decision.

IMHO it is (depending why they crashed*)

For many, the bottom will be much lower than now and for some zero.

There's an inherent assumption in your statement (about bottoming out, eg "when" they bottom out) that such shares will then rise up again, perhaps to where they were. But maybe they are a falling knife destined to stick themselves in the floor and you'll get cut trying to catch them.

* TBF I made a fair bit of money immediately after the Brexit vote doing what you are planning, by buying housebuilders that had taken a big hit, on the grounds the market had overreacted and that British people would still like to live in houses, Brexit or no Brexit. However many of the current falls are fundamental,  based on changes of business that are structural. I dont see airlines recovering any time soon for example not restaurants groups, nor oil companies, nor property businesses that manage malls and the like.

But Another Joe, they (stocks I'm referring to) will bottom out, and will rise, won't they? 

Not necessarily. 

Companies particularly hard hit could go to the wall and your stocks become worthless. Companies like Cineworld might be in this boat for example if there is no return of customers for months or years.

You may find companies that don't go to the wall suffer from technological/societal changes which means their business model is no longer as safe as it used to be. They may struggle to grow revenues or cut costs whereas more nimble competitors find it easier and start to take market share. In that case, the stock price after crashing may just stay flat for a bit - and whilst you don't lose money, you lose the opportunity gains that you could have realised if you invested in these other companies.

I think the thing people are trying to say is that it's quite difficult to pick out a truly undervalued company. Even those that offer a wide margin of safety doesn't mean you will be almost guaranteed to make gains, it just lowers chances of further losses.

HSBC is in your 10 value stock lists, but it's currently cheaper than it was in the depths of 2009, and any investor who bought HSBC shares between September 2003 and 2008 has never once had even the chance to sell at a gain since.

Fair enough (Cineworld might be one to avoid in any case). I guess the situation isn't helped by sites like Morning Star and Motley Fool (respected sources of info for Joe Public) pitching the likes of BP as potential value buys. Just hard to believe that a co the size of BP would be out footed (no matter how nimble they are) by smaller cos. Will have a re-think, though, in light of the prevailing sentiment in the replies to my post.

Anything that gets promoted in the media is IMO generally something to be extrememly cautious about, if not to avoid completely.