Questions on available bargains

**blast_investor** Thu Jan 18, 2007 9:38 pm

Questions on available bargains
igt500 wrote: Also... Buffett mentioned he would be looking over seas for cheap companies if he was small and starting out again.. just curious on your thoughts regarding this.

Hi igt500,

Warren Buffett said that he found tons of bargains decades ago. When Buffett started out, the stock market in general was much cheaper than current valuation.

Right now in US, the average SP500 PE is around 16 to 17. This is not very expensive valuation. However, historically over last hundred years, the US stock valuation was trading between average PE of 10 to 20. Therefore, the current valuation is in the middle upper position of historical range. I would consider current valuation as normal, but not bargain times.

Specifically, I myself can not find that many bargains in small cap world, or big cap world. This time is definately not seas of bargains. This can be understood by my above assessment of average valuations.

**igt500** Thu Jan 18, 2007 10:06 pm

Questions on available bargins
Hi,

I believe he said if he was starting out today he would be looking over seas for bargins..

Thanks

**blast_investor** Thu Jan 18, 2007 10:23 pm

Re: Questions on available bargins
I had not read that comments from Buffett on the current state of bargain levels using 'sea' word. I had read about his comments on the large bargain level decades ago. Buffett even said that he was able to cherry-picking from top choices then.

The relavent article is here :

http://www.fool.com/community/pod/2005/050713.htm

Obviously, picking as Buffett said in above article is not an easy job. It is not easy to find those low PE (PE of 2) like stocks. Nobody is going to tell investors on those bargains just as Buffett said in the article.

You would probably be looking at seas of stocks (not bargains), and find only one bargain.

igt500 wrote: Hi,

I believe he said if he was starting out today he would be looking over seas for bargins..

Thanks

**MyTh** Sun Apr 08, 2007 1:23 pm

As a small investor my approach, is to find bargains where I can but, to also aim to profit from minor pricing errors. I believe everyone is looking for that great long term buy that he can hold for years to come but, I will also take that Contrarian play that dropped 30% in a week because of an earnings miss.

The market in this situation usually quickly sees that it overreacted and corrects a bit. I take these plays if there is a value twist to them because if there is more pain to come then I feel comfortable holding the stock for a longer term. If it corrects quickly (15% in 2 - 3 weeks) then I take my profits and get my cash out. I believe these plays are easier to find then 4 bangers and I dont mind parking my cash in them for the short term.

Situations like the Canadian Conroy one pop up here and there and are good places to park cash while looking for longer term investments.

**pass** Sun Apr 08, 2007 1:30 pm

Re: Questions on available bargins
I believe igt500 means overseas, rather than "over" "seas of bargins"

blast_investor wrote: I had not read that comments from Buffett on the current state of bargain levels using 'sea' word. I had read about his comments on the large bargain level decades ago. Buffett even said that he was able to cherry-picking from top choices then.

The relavent article is here :

http://www.fool.com/community/pod/2005/050713.htm

Obviously, picking as Buffett said in above article is not an easy job. It is not easy to find those low PE (PE of 2) like stocks. Nobody is going to tell investors on those bargains just as Buffett said in the article.

You would probably be looking at seas of stocks (not bargains), and find only one bargain.

igt500 wrote: Hi,

I believe he said if he was starting out today he would be looking over seas for bargins..

Thanks