<![CDATA[Main Street Value Investor™ - MSVI Blog]]>Wed, 28 Feb 2018 16:49:07 -0500Weebly<![CDATA[Lessons In Risk Management For Self-Directed Investors]]>Wed, 28 Feb 2018 18:27:26 GMThttp://davidjwaldron.com/blog/lessons-in-risk-management-for-self-directed-investorsAbout: Value Investing

  • Benjamin Graham once reminded his students, "The essence of portfolio management is the management of risks, not returns."
  • At Main Street Value Investor, we focus on four broad indicators that measure the downside risk of the stocks held in our portfolio or taxiing on our watchlist.
  • The recent market downturn, regardless of its ultimate duration, is a stark reminder that managing risk should be the number one priority for the self-directed investor.
  • Here's our take on screening company risk profiles toward uncovering quality stocks with limited downsides that protect our invested capital.

The sudden downturn in the market reminds us of something we consider a cornerstone of the Main Street Value Investor Model Portfolio: understanding the downside risk profile of each stock owned or taxiing in our watchlist.

​Here is Main Street Value Investor's model for practicing due diligence in uncovering, managing, and executing downside risk in your stock portfolio.
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<![CDATA[Searching For A Wide Margin Of Safety In An Uncertain Market]]>Fri, 26 Jan 2018 19:17:16 GMThttp://davidjwaldron.com/blog/searching-for-a-wide-margin-of-safety-in-an-uncertain-marketAbout Value Investing

  • At Main Street Value Investor, we buy and hold the stocks of quality companies with history and the continued likelihood of compounding total returns from capital gains and dividends.
  • Especially in this uncertain market, it is crucial to evaluate downside risk and other measurements of the stock's margin of safety.
  • Warren Buffett perhaps said it best, "Price is what you pay; value is what you get."

​Investing with a margin of safety is defined as the difference between the estimated intrinsic value of the stock and its current market price.

Powered by Ivy-League degrees and sophisticated software, Wall Street disseminates complex, assumptive financial models of seemingly precision earnings estimates and price targets, each market day.

But many of those projections ultimately play-out as no more intuitive than a crystal ball; otherwise, the investment elite would be as wealthy from portfolio performance as they are from fees and bonuses.

We take a more straightforward, realistic approach to measuring intrinsic value by instead focusing on five controllable quantitative areas that gauge enduring value from the compounding stocks of quality companies.

​But inevitably the herd will ask, "At what specific price will the stock be trading next week, next year, and in the year 2028?" My answer:
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<![CDATA[On The Death Of Value Investing]]>Sun, 12 Nov 2017 05:00:00 GMThttp://davidjwaldron.com/blog/on-the-death-of-value-investingAbout Value Investing

  • Market luminaries are openly questioning the enduring legacy of value investing in this seemingly unstoppable bull market led by the FANGs, HYDiS, and other speculative investment strategies.
  • Perhaps value investing is too long-term and too low cost for a nearsighted, unnecessarily sophisticated financial services industry bent on justifying exorbitant fees and bonuses.
  • But trying to predict trends, catalysts, and macro events that produce consistently profitable trades is mostly a fool’s game.
  • Despite the noise, value investing will endure because value matters.

During the past several months, some prominent Wall Street players have questioned the enduring legacy of value investing or have outright declared its imminent death. And why not as we are enjoying a bull market for the ages where non-dividend paying growth stocks (FANGs), momentum trading, trend following, and high yield dividend equity (HYDiS) among other speculative portfolio strategies, are outperforming the more risk averse value approach.

But we think that investing in quality, dividend-paying companies at reasonable prices — whether from a growth or value perspective — endures well beyond the scrap heap where this market may ultimately dump the portfolios of investors that are chasing fast money in the euphoria of a post-Great Recession boom.

Thus, we believe value investing will survive as the superior investing strategy along with dividend growth investing not called HYDiS. Value investing is not dead. It is just camouflaged, with die-hard practitioners waiting in the bushes ready to pounce on the falling stock prices of otherwise enduring enterprises.

​Here is Main Street Value Investor’s argument that value matters in all markets.
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<![CDATA[High Yield Dividend Stocks Are Equity Junk Bonds]]>Thu, 02 Nov 2017 04:00:00 GMThttp://davidjwaldron.com/blog/high-yield-dividend-stocks-are-equity-junk-bondsMarket commentary

  • High yield dividend stocks are the all the rage in this seemingly endless bull market otherwise starving for higher payouts in a low interest rate environment.
  • Where high returns are found also loom equally risky headwinds and questionable underlying fundamentals - just ask the victims of the '80s high yield junk bond bubble.
  • “Perhaps this market and its high yield equity opportunities are different,” the perma bulls predictably rejoice.
  • But we screened the 345 publicly traded stocks currently yielding 6% or higher and found mostly junk.

The high yield junk bond craze of the 1980s has returned to the current bull market in the form of high yield dividend stocks. And history reminds us how that bubble burst during the stock market crash of 1987.

This time, instead of being used to leverage mergers & acquisitions at the corporate level when available capital was not enough, high yield equities are influencing the propensity for daring risk/reward plays by retail investors or their advisors seeking outsized returns to leverage retirement account balances.

​​At Main Street Value Investor (MSVI), where quality takes the front seat in all of our equity research, we screened the current high yield dividend stock universe for fundamental strength and found mostly junk.

Here is our argument that high yield dividend stocks are the new equity junk bonds.
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<![CDATA[Keeping Portfolio Costs Low Goes Beyond Fees And Commissions]]>Tue, 01 Aug 2017 04:00:00 GMThttp://davidjwaldron.com/blog/keeping-portfolio-costs-low-goes-beyond-fees-and-commissions
  • Advisory fees and broker commissions are typically the primary targets when addressing the costs of managing a self-directed investment portfolio.
  • Keeping fees and commissions well below 1% are paramount to a cost-effective investment portfolio.
  • But Main Street Value Investor gauges at least five other significant threats to a portfolio’s total return.

The churning of fees and commissions is the Wall Street way to a beach house in the Hamptons. How about returns on capital invested? That is certainly an added benefit of the financial elite's output when it occurs.

​However, the individual investor on Main Street must be wary of a myriad of other portfolio expenses that eat away at total returns.

Regardless of level, whether professional or personal, investing full-time, part-time, or in your spare time, all investors should focus on keeping portfolio costs as low as possible.

As defensive investors, we have developed a model to measure the real costs of managing and sustaining a profitable investment portfolio.

​Here is Main Street Value Investor's primer on keeping portfolio costs as low as possible. Surprisingly, it involves more than just pursuing reasonable advisory fees or discount brokerage commissions.
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<![CDATA[Apple's Emotional Bears Outwitted By Rational Bulls]]>Tue, 16 May 2017 04:00:00 GMThttp://davidjwaldron.com/blog/inside-main-street-apples-emotional-bears-outwitted-by-rational-bullsAbout Apple, Becton Dickinson, Delta Air Lines, IBM, Johnson & Johnson, Coca-Cola, 3M.
  • Becton Dickinson's new public offerings to finance Bard acquisition remind us why we are bearish on the stock.
  • Delta's narrow moat is not diluting returns to shareholders.
  • Was Warren Buffett right when he bought IBM, when he sold, or both?
  • Coca-Cola's new CEO did a Brexit, speaks Spanish, and drives a Tesla.
  • 3M is an overvalued powerhouse.

Members of Main Street Value Investor Premium Forum received the first look at this commentary in a series of research notes.​
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<![CDATA[Earnings Season Forecast: Cloudy With A Chance Of Autonomous Vehicles]]>Thu, 20 Apr 2017 19:50:32 GMThttp://davidjwaldron.com/blog/earnings-season-forecast-cloudy-with-a-chance-of-autonomous-vehiclesAbout Main Street Value Investor Model Portfolio

  • Apple wants you to stop pricking your finger and driving your car.
  • Delta expects these two sectors to increase travel this year.
  • Disney is the new favorite company of the M&A rumor mill.
  • Coke takes a swing at Pepsi.
  • 3M holds competitors to one of the Ten Commandments.

Welcome to the inaugural post of Inside Main Street providing opinion and analysis on the latest news, earnings, and events of the companies and funds of the Main Street Value Investor Model Portfolio & Watchlist (MSVI). Subscribers to MSVI Member Forum in the SA Marketplace got the first look at this commentary.
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<![CDATA[Buy When The Black Swan Flies; Sell When It Comes Home to Roost]]>Sat, 23 Jul 2016 04:00:00 GMThttp://davidjwaldron.com/blog/buy-when-the-black-swan-flies-sell-when-it-comes-home-to-roostSummary
  • Value investors on Main Street buy wonderful companies with strong fundamentals when macroeconomic events produce attractive valuations.
  • Then sell or reduce the holding on weakened fundamentals or inflated valuations when microeconomic events erode the company's financial strength or the demand for its products and services.
  • But Mr. Market continues to entertain the purchase of attractive fundamentals at otherwise high prices and narrow margins of safety.
  • Thus, the Value Investing for Main Street Model Portfolio [VIMS] is currently more a watch list than a buy list.

​Welcome to the second installment of the Value Investing for Main Street series.
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<![CDATA[Introducing: Value Investing for Main Street]]>Tue, 05 Jul 2016 04:00:00 GMThttp://davidjwaldron.com/blog/introducing-value-investing-for-main-streetSummary
  • Value investors on Main Street with limited capital, lower costs, and less risk can achieve superior returns to the titans of Wall Street, who always outperform in fees and commissions.
  • The author will build a real-time, article generated model portfolio of major exchange-traded large, medium, and small cap stocks and funds using his proprietary Value Investing for Main Street™ system.
  • The Value Investing for Main Street™ creed mirrors the wisdom of Warren Buffett, the most successful main street value investor of our time.
  • Long-term investment horizon buying wonderful, dividend-paying companies (or funds of companies) at reasonable prices and holding for as long as the company or fund remains wonderful, including forever.

​Welcome to Value Investing for Main Street, my proprietary model where Seeking Alpha readers that are living on Main Street can learn how to achieve potentially superior long view investment returns with limited capital, lower costs, and less risk than many of the power brokers working on Wall Street.
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