Profile picture
, 3 tweets, 1 min read
My Authors
Read all threads
No. Using a P/E ratio to determine whether a security represents a partial interest in a business is a "value stock" is like changing a car tire with a pickle. Someone may want to use a P\E ratio as a statistical factor in a index fund. That's different. news.google.com/articles/CAIiE…
Fama/French's "value" is determined by a database screen that sorts based on factors like book value.

Charlie Munger's "value" is a function of margin of safety, determined by measuring price against intrinsic value based on estimated future cash flows. google.com/amp/s/25iq.com…
People seem to know the difference between: 1) active investing and 2) an index fund. But if the term "value" is used, their views on the two styles often collapse into one and a statistical factor useful in creating a fund is thought of as a way to value a specific business.
Missing some Tweet in this thread? You can try to force a refresh.

Enjoying this thread?

Keep Current with Tren Griffin

Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

Twitter may remove this content at anytime, convert it as a PDF, save and print for later use!

Try unrolling a thread yourself!

how to unroll video

1) Follow Thread Reader App on Twitter so you can easily mention us!

2) Go to a Twitter thread (series of Tweets by the same owner) and mention us with a keyword "unroll" @threadreaderapp unroll

You can practice here first or read more on our help page!

More from @trengriffin see all

Profile picture
Tren Griffin
@trengriffin
When I'm in video conferences people often say: "What's up with the roof behind you?"

During the nutty dotcom days in 1999 I had built an office space with a barrier on tracks that can move to make one room into two. To one side of my Aeron chair also from 1999 is a treadmill.
2/ My home office is a reminder of crazy Internet bubble times when FOMO ruled and seeds of hubris related crashes were being sown. The launch and birthday parties in that era were nuts (but fun tho).

A bigger space is nice when I work on my Toosie Slide!
3/ "I like people admitting they were complete stupid horses’ asses. I’ll perform better if I rub my nose in my mistakes. This is a wonderful trick to learn. Forgetting your mistakes is a terrible error if you are trying to improve cognition. Why not celebrate stupidities!"
CM
Read 6 tweets
Profile picture
Tren Griffin
@trengriffin
"The Yale endowment’s most recent public value was $30.3B as of last June, making it the second-richest private U.S. college. About 2.75% of assets are targeted for domestic equities and 13.75% for foreign stocks." google.com/amp/s/ca.finan…
"The Yale endowment’s equities increased to $267.4 million as of the end of March from $62.8 million at the end of last year as the Ivy League school greatly expanded its holding in the SPDR S&P 500 ETF and established a new position in the Vanguard FTSE Developed Markets ETF."
At 774 colleges and universities endowments grew, on average, by 5.3% over the past fiscal year. Those endowments grew by, on average, 8.4% per year over the past decade.

Yale’s endowment has shown 5.7% growth over the past year and 11.1.%. yaledailynews.com/blog/2020/02/0…
Read 3 tweets
Profile picture
Tren Griffin
@trengriffin
"Expected long-term cash flows, discounted by the cost of capital—not reported earnings—determine stock prices." expectationsinvesting.com/pdf/earnings.p…

Doing the cash flow analysis requires actual work, so people focus on the earnings numbers that must be submitted in SEC compliance documents.
"With discounted cash flow models, the value is sensitive to the inputs. But the assumptions underlying the inputs are explicit. You can compare them to base rates, discuss them, and debate them. With multiples, those assumptions are buried." valuewalk.com/wp-content/upl…
Many people love to use ratios since they hate doing work. The idea that there is advantage in using ratios, especially when they are that easy to find and use, is a triumph of hope over experience. Salespeople do use ratios effectively to tell stories to charge fees though!
Read 3 tweets

Embed code for your website

×
Follow Us on Twitter!

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3.00/month or $30.00/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!