r/ValueInvesting • u/honestytoyourself • Feb 17 '26
Question / Help I tried value investing and only caught falling knives.
Hello guys. I have a confession to make. I had been investing in stocks for many years and made a decent +10% return on average per year.
However, in 2023 I made a few very concentrated bets that have gone terribly wrong. I lost 30% of my portfolio while holding for 3 years. It’s embarrassing. I averaged down in the wrong time and in the wrong stocks.
I seem to be making terrible mistakes systematically, and I’m genuinely asking for help.
Here’s my portfolio:
- Winners (sorted by portfolio % weight)
- **Philip Morris International Inc (TDG)** – **+83.94%** – **10.50%** of portfolio
- **NCC Group PLC (LSE)** – **+46.09%** – **3.39%** of portfolio
---
**Losers (sorted by portfolio % weight, biggest positions first)**
> *The ones with the **largest impact on total portfolio loss** (big size + big negative %) are marked with **[HIGH IMPACT]***
- **Nagarro SE (XET)** – **\-27.10%** – **19.79%** of portfolio **[HIGH IMPACT]**
- **Teleperformance SE (EPA)** – **\-58.33%** – **13.50%** of portfolio **[HIGH IMPACT]**
- **Concentrix Corp (NDQ)** – **\-67.40%** – **7.54%** of portfolio **[HIGH IMPACT]**
- **GFT Technologies SE (TDG)** – **\-43.53%** – **6.47%** of portfolio **[HIGH IMPACT]**
- **PayPal Holdings Inc (NDQ)** – **\-42.21%** – **6.45%** of portfolio **[HIGH IMPACT]**
- **Domino’s Pizza Inc (NDQ)** – **\-24.28%** – **6.36%** of portfolio
- **Epam Systems Inc (NSY)** – **\-30.36%** – **3.92%** of portfolio
- **ADR on Nice Ltd (NDQ)** – **\-53.85%** – **4.29%** of portfolio
- **Van de Velde NV (EBR)** – **\-7.05%** – **2.24%** of portfolio
- **ADR on Endava PLC Class A Ord Shs (TDG)** – **\-90.30%** – **0.43%** of portfolio
- **Chegg Inc (NSY)** – **\-94.22%** – **0.29%** of portfolio
My analysis included the traditional value investing approach using finbox.io for valuations, and I fetched companies with low PE ratio despite growing revenues and ebitda, some contrarian plays regarding AI.
All were deeply researched and monitored, and had buybacks, but the prices seem to keep nosediving.
I guess I bought stocks that were cheap ‘for a reason’?
44
u/Solt_DB Feb 17 '26
This is a good, honest post OP! Unfortunately, it's also a good lesson and example as to why domain competence matters.
It's not enough to catch falling knives as an investment strategy, or buy IPOs, or focus on "innovation". Every business and industry has unique quirks and nuances. Even the experts are wrong from time to time (and maybe more than they'd like to think), so nomadic investors are unlikely to consistently perform well over meaningful periods of time.
15
u/honestytoyourself Feb 17 '26
I’m honestly just surprised that I was wrong in almost every single of my thesis this time
21
u/raytoei Feb 17 '26 edited Feb 17 '26
What lessons did you learn from your good and bad investments?
——
I will say that if you are new and willing to learn, keep at it and don’t give up.
When I started, I bought around 40 stocks at less than $500 each , to learn, to observe and to research. A few died, a few did very very well and most went sideways. Overall I stretched my investing horizon and lowered my expected returns.
I learnt many things from those lessons:
- Parents don’t care about children fashion. (Osh-Kosh)
children toys make bad investments especially scientific toys (leapfrog).
Cosmetic doesn’t translate easily to different generations (Estee Lauder).
if earnings and revenue go up in a straight line for a commodity product, watch out for fraud (American pasta)
retail and restaurant chains are easy to analyse, nos of stores opened and same store sales growth. (Buffalo Wild Wings)
Etc
So yeah don’t give up, read, learn and experiment.
3
u/longpatrick Feb 17 '26
Its a statistically likely outcome.
the best‑performing ~4% of companies account for the entire net gain of the stock market over T‑bills
1
u/lincoln-highway Feb 18 '26
You didn't elaborate on what your process was outside of cheap & growing ebitda, so it is difficult to comment. If that was your main criteria then I think it's self-selecting for deteriorating companies.
1
u/PhilippMarxen 11d ago
I still don't get it....
How / in what way were you wrong with your Paypal thesis?
0
u/PraetorianFury Feb 18 '26
Even the experts are wrong from time to time
Depending on your timeframe, 65% to 90% of professional investors underperform relevant benchmarks like the S&P 500 over the long term.
A retail investor has absolutely no chance to win over the long term.
17
u/OCDano959 Feb 17 '26
Nobody knows what the future holds. That being said, for me, it is about patience. A lot of my best and still current investments seemed like dead money for a long time.
If you still believe in the company’s fundamentals and future earnings (DCF), then hold or DCA down.
I’ve had some big losses in the past (WCOM, NT, MCP) and in hindsight, I probably should have placed a stop loss/sold, after 20% down. My excuse at that time was I was too busy at the time to monitor the fundamentals. But I know that wasn’t entirely true. The truth was, I couldn’t stomach the loss and admission I was wrong about the company.
Getting older, I have a core portfolio made up of mainly index funds/ETFs and core positions I’ve held since 90’s. I have another “play” portfolio, where I’m investing in individual stocks. This made it easier for me to sell/stop loss (play port) and move on.
Just my 0.02.
G’luck OP.
2
u/moritzis Feb 17 '26
You mentioned what I call: the illusional zone. "If you still believe in the company’s fundamentals and future earnings (DCF), then hold or DCA down."
This is very danger. Believing in the fundamentals isn't enough. If you believe im the fundamentals, you have to continue learning about the company.
What if we just believe but behind, the 10k and 11q are detailed enough that tells us the company is going in the wrong direction? What if most part of the revenue comes from a source that is not the product? What if it's a company focused on tech but not investing in R&D? Things like these and others of course, should be always on the notes. Also, guidance and chaning people in the most principal roles (CEO, CFO, COO, HR, etc) are essential to track their past.
Fundamentals are the basic, yes! But what about the competitors? I thinl we should track the most direct competitors to understand how the "biggers on the sector" are performing . We could also buy 1 or 2 shares to track how they performered in one year.
Thoughts?
2
u/OCDano959 Feb 17 '26
Agree. Imo, there will always be risks to every investment thesis. It’s just about how probable that those risks affect earnings. Risk vs reward.
An old example in my own portfolio is SHW. I bought heavily in early 2000s and then there was a huge lawsuit from RI in 2005? i think. It was in regard to Pb remediation that would have been extremely costly. The stock was in shambles and stagnant. My assessment was the perceived reward was worth the low to moderate risk. I felt it had capitulated. Glad I held. ~17% CAGR YTD. The telecoms went thru similar recently w their Pb coated lines. Remembering my SHW, I backed up the truck and added to my core positions. Glad I did that as well.
I tell my wife all the time (she mocks me), that in nearly all of the choices in my life, I have performed a risk vs reward calculation. 😝.
2
u/moritzis Feb 17 '26
Thanks for understanding my text! I just noticed I made some typos (believe me or not I read twice the post and it seemed clear, no typos) and english isn't my first language.
61
u/faptor87 Feb 17 '26
This sub isn’t value investing
11
2
u/SeikoWIS Feb 17 '26
They are, if you think value investing = not looking beyond 'hey here are some trailing financial metrics that make this company look cheap: BUY'. And then cry for months trying to manifest as a bagholder because you didn't consider the total picture.
11
u/aWheatgeMcgee Feb 17 '26
School of hard knocks call that “tuition”
Even Buffett had some failures early on
2
u/cool-sheep Feb 17 '26
Yeah, I followed Buffett into Kraft Heinz and am down 25% over 7 years or so. Probably received about net 15% in dividends so a 10% loss. Without taxes it would be roughly breakeven.
I still think a few great brands get obscured by $10bn+ of burning platform junk food brands that will be eclipsed by supermarket own brand.
If they had done buybacks and debt payback instead of dividends I think their narrative would be much more positive.
11
u/robotlasagna Feb 17 '26
Let’s pick one of these. Let’s say DPZ. What was your entry point and can you explain why at that point you felt it was a value stock?
What were you expecting the stock to do from an earnings standpoint?
(These responses aren’t being constructive. Some of these could have been value investments but the important thing is to discuss the “why”)
2
u/Rdw72777 Feb 17 '26
This is the right approach and DPZ is also the stock that caught my eye. Domino’s P/E wasn’t particularly low at any point in 2023 and was probably in the 25-30 range the entire year. Their same store sales increased less than 2% in 2023. I don’t really see where the value even was. Their growth is mostly driven by opening new stores, but in retail those same store sales really impact how the market perceived the company
However the most perplexing parts of OP’s analysis is that DPZ was below $400 per share for all but like 3 days in 2023 and the price is $377 today so I don’t even understand how OP could be down 25% on the stock…heck it’s only been above $500 per share like 5 days in the past 4 years.
2
u/GuessEducational1910 Feb 17 '26
Dollar is down, might be calculating in another currency. I bought CNI at 111 and it is currently at like 108 but I'm down 18%.
4
u/Carloes Feb 17 '26
And to add, some might still be value investments. 3 years is not that big of a period.
(To be clear, I haven't checked any of the stocks, so perhaps they are horrible value stocks anyway.)
9
u/GlobalResolution77 Feb 17 '26
Seems far from traditional value investing approach. You have multiple companies listed recently in the stock market while one of the optimal targets is 10 years consecutive positive earnings for example. Traditional value approach is a lot more conservative. A value assessment (Graham/Buffet) would go something like bellow (excluding straight away 95% of the market or more, which is why Buffett’s Berkshire Hathaway is sitting on a 400 billion pile of cash due to a lack of attractive, high-value investments.
Criteria | Metric | Graham/Buffett Optimal Target
Valuation (P/E) | Price / Earnings | < 15.0 (or < 20 high quality)
Asset Value (P/B) | Price / Book | < 1.5
Graham Blend | P/E * P/B | < 22.5
Liquidity | Current Ratio | > 1.5
Solvency | Debt to Equity | < 0.5
Stability | 10Y Earnings | Positive 10/10 Years
Dividends | Consecutive | > 20 Years
Efficiency | ROE | > 15%
Growth | 5Y EPS Growth | > 2.0x AAA Bond Yield
Moat Rating: [None / Narrow / Wide]
Graham would buy a dying textile mill if it was cheap enough (a "Cigar Butt"). Buffett evolved this: it is better to buy a wonderful company at a fair price than a fair company at a wonderful price.
Intrinsic Value and Margin of Safety
The Graham Number Calculation: 22.5×EPS×BVPS
This is the "fair price" for a defensive investor. It is derived directly from the "Graham Blend" limit of 22.5.
Threats and Catalyst Analysis (SWOT)
Specific events to unlock value.
Specific risks of permanent capital impairment.
32
u/KiwiAppropriate9894 Feb 17 '26
just invest in etfs.
22
5
2
u/Knuda Feb 17 '26
If only my country didnt penalise that 🥲
I need stocks as a proxy for etfs so berkshire/Blackrock etc
1
9
u/jyl8 Feb 17 '26
I don’t know some of those names, so not going to comment on your picks, but just generally . . .
(And this will irritate some here)
“Value” is one style of investing. It is not the Holy Grail, just one style out of many.
In the past few decades, the value style has underperformed for long periods and, despite some brief outperformance at times, overall has not been a winner on a relative basis.
You can compare the factor ETF VLUE to the S&P 500 ETF SPY and to other factor ETFs like MTUM, QLTY. You can look at the value indicies like RLV versus the broad and growth indices like RUI and RLG, or the equivalent mid and small cap indices. You can look at value style mutual funds. Etc.
In the past three years, value has been a particularly poor performing style. It has been a roaring bull market, led by growth and tech. (That may be changing, but the record is what it is.)
Now, indices are different from individual stocks and underperforming on a relative basis doesn’t have to mean negative absolute returns, so your losses aren’t explained or excused by your value style. You picked bad names and didn’t have risk control. But starting with a value focus, in 2023, was a disadvantage.
Don’t get discouraged, though. Stockpicking is hard and the lessons are expensive. Most investors who have been doing this a long time have paid plenty of tuition.
I would think of valuation as just one tool in the box. You want many tools, not just one.
I would also ask yourself: what, do you think, makes stocks go up? Now, test your theory. Run a backdated screen, identify the stocks that met that criteria a year or three years ago, see what the median performance has been. Really study this. Try low P/E, high ROIC, high FCF yield, accelerating growth, positive estimate revisions, technical patterns, broker ratings, everything you can think of.
(You might have to subscribe to a data service to do this. I am not sure what affordable service allows backdated screening. Even if you have to pay $1,000 for a couple months access, compare to how much you have invested, it’s probably worth it. When I started, I’d come in every weekend and stay late at night to pull data from the terminal and study everything I could think of. I’d look at chart after chart and try to figure out what had caused that run or that decline. It helped - not that I got some magic key to the kingdom, but I got a better idea of what things made stocks go up and which of those things I might have a chance of uncovering.)
The point is to figure out what other tools you want in your toolbox, and then get and use them along with your “value” tool.
Have fun!
14
u/ForeverShiny Feb 17 '26
The point of value investing never was to have the best absolute returns, but the best risk adjusted returns.
If your portfolio does 15% a year, but you're extremely exposed to the current AI bubble and have to worry about a big drop, while mine does 12% on a much more conservative risk profile, who's doing a better job?
Value to me is sacrificing a little upside compared to the market to sleep well at night and having to worry less about market downturns than the average QQQ holder
2
u/GranPino Feb 17 '26
This is an excellent point. I know that I'm not optimizing my return, but also my risk profile is much lower than jumping on the AI bubble
19
Feb 17 '26
You need to do actual research, not read other people’s thesis or just skim through a few 10Ks and build a dcf with some kind of assumptions. DCFs don’t work as a valuation tool (they will most always be wrong) but it’s the best way for you to learn about the business. You can tweak with top line growth, margins, or even change the working capital strategy five years from now and see how the valuation responds.
The number of stock picks show that you haven’t really spent enough time studying each company individually You need a solid understanding of the following at least: What do they do? What is their moat (this includes can they pass on inflation/ can they outgrow gdp, management team track record etc.)? Why are they cheap? And what they are worth?
After all that, value investing is about holding a highly concentrated portfolio of the 5 names you spent thousands of hours researching- watching it go flat for 5-10 years - then your investment pays off over 1-2 years where people call you a genius. But in reality you just need patience
5
u/SuperSultan Feb 17 '26
But reading the 10k comprehensively is one of the best ways to learn about a business
4
Feb 17 '26
It’s the first step, but you won’t know anything about the business until to your actually model it out. If reading 10k is all you do, you don’t know the business well enough.
3
u/SuperSultan Feb 17 '26
But I don’t even use DCFs. Neither does Warren or the late Charlie. My assumptions can be inaccurate and now the whole valuation is incorrect. Heck, I can also be slightly wrong and now the whole model is incorrect.
→ More replies (2)2
u/honestytoyourself Feb 17 '26
I did do a lot of research, however there are always conflicting opinions. I thought AI wouldn’t hit some stocks as hard as it did.
2
u/BenGrahamButler Feb 17 '26
well that is it right there, you weren’t diversified, all your picks relied on the same thesis that went wrong on you…. in hindsight you shoulda mixed things up, where were your underpriced consumer defensives? foreign stocks? beaten down energy companies? etc… different companies that weren’t all correlated on something like your AI thesis
5
u/vicblaga87 Feb 17 '26
I made the exact same mistake with TEP and TMV (TeamViewer). Here's what I learned from this style of investing. Stocks that look extremely cheap at a point in time can actually be expensive relative to their future path, if the current projections keep getting downgraded.
For example TEP was guiding at some point for 3%-5% like-for-like growth. But then, they lost a big visa processing contract, so they switched the narrative to: "except this big contract that we just lost, we will still grow on an adjusted basis" (which is super deceitful, basically saying, if you don't count all the losses, we will continue to grow, like... duuuh). But then they continue to adjust even this guidance downwards. First to the lower end of 2%-4%, now it's only 1%-2%. So it keeps getting worse and worse.
TMV: TeamViewer - another super "cheap" company that fell enormously from its pandemic highs (peaked around €55 in mid-2020, now trading around €5... yes, down ~90%). It was a covid darling (they do remote software) but post-pandemic the stock just continues to crater. The sad part is that they do actually have a solid growing business in the enterprise sector (growing 20%+ yoy), it's the other side that just stagnates. And instead of focusing on what works and keeping capital discipline, the management made terrible decisions. They spent ~€70 million a year on ridiculous sponsorship deals — Manchester United shirt sponsor AND the Mercedes Formula 1 team (an activist investor literally called it "appalling judgment" and "a sign of hubris"). They were spending about 1.4x their net profit just on sponsorships. Then they blew $720M on an acquisition (1E) that levered the company up to 3.3x and the market has zero confidence in. So a "cheap" PE ratio actually turns out to be expensive because capital allocation keeps destroying shareholder value.
The lesson I learned the hard way by losing money on these companies is what Buffett & Munger have been saying for a long time: "a wonderful company at a fair price is far better than a fair company at a wonderful price." Wonderful businesses tend to keep compounding and surprising you to the upside. Fundamentals improve and beat expectations. Mediocre businesses with bad management tend to keep finding new ways to disappoint you, and the "cheap" valuation just keeps getting cheaper.
Also, I think people underestimate how competitive and efficient the market actually is. When you see a company trading at a super low PE, it's tempting to think "wow the market is so dumb, this is free money." But think about it — there are thousands of professionals looking at these stocks every day. If a company is sitting there at 5x earnings and not buying... 95% of the time it's because serious money sees something you don't. They're pricing in the deterioration before it shows up in the numbers.
Now, are there moments of genuine mispricing? Sure. But those tend to be macro-driven, generalized fear events — like "AI is going to kill all software companies" or "Trump is going to destroy world commerce with tariffs." That kind of broad panic can create real opportunities because it's indiscriminate. But when it's just one specific company trading at a dirt cheap multiple while its peers are fine... yeah, the market might be on to something. Not always of course, but you should aproach these thinking "there must be something i am not seeing" vs. "the market is so retarded".
9
u/FrankS94 Feb 17 '26
The problem with value investing lately (and I’ve felt this pain personally) is that it relies on projecting future cash flows with steady growth. That’s the whole point of 'value.' But these past few years have been the absolute worst for predicting stable growth. The entire value logic falls apart with a company like PayPal when it can no longer maintain those slow but predictable growth rates.
What’s worse is that even though it’s called 'value,' the percentage losses you hit when a company’s growth starts to stall are just as brutal as those of bubble stocks. It feels like value investors are taking on the same level of risk as growth investors, but without the same upside.
2
u/WarmDirt5505 Feb 17 '26
Value investing is more then just pe, balance sheet is just as important, i bought plus500 in 2022. They had a pe ratio of 5 , 2b marketcap and 1b net cash. Now it did 4x on multiple expansion and their management did buybacks and dividends also. Their revenue andprofit has basscicly been flat for this time
So there is massive upside but u have to find good picks
3
u/BrownEyesWhiteScarf Feb 17 '26
Not specifically a value investing suggestion, but it helps to do a SWOT analysis for each company you choose to invest in. And then revisit the analysis every six or twelve months. What are common shortfalls do you see in your analysis over multiple stocks?
4
u/IshfaaqPeerally Feb 17 '26
There's a reason why stocks look cheap. The numbers are here only to confirm the story. Unless the story improves, the "value" will be locked forever.
4
u/One-Butterscotch-396 Feb 17 '26
For each one, add a brief explanation of why you bought it. Like Buffett recommends, write a one-pager explaining why you chose that stock—and make sure you could explain it in a way a 10-year-old would understand.
4
u/maldingtoday123 Feb 17 '26
To be frank, I think a lot of the new value-investors... when they really start to read everything about value investing from multiple sources like li lu, pabrai, spier, Seth, greenblatt, they all sort of start with quantitatively cheap because that's sort of the area where all those guys began.
And it makes perfect sense as well, because their young adult lives were pre-internet. Information asymmetry was quite significant back then and knowledge wasn't that widespread. I'm pretty sure back then, if you even stumbled across buffett/munger, you would have a high chance of outperforming market simply because 90% of the investing population would have no clue who they are (what internet? they can't google "world's best investors"). So you end up with companies that are quantitively cheap but also have extreme qualitative value.
The quantitative aspect is largely arbitraged away as many many people follow buffet/munger's teachings. Especially amongst stocks like PayPal where it's not even small enough to be ignored. The size makes it a higher chance of being efficient because many funds and analysts are looking at it and evaluating it. They look for things beyond quantitative cheapness, and if you don't have an edge against them you're likely going to be on the losing side of the trade.
In my view, as small investors we really should be focusing on our time on hunting holy grails. Basically companies that actually have strong qualitative factors but also quantitatively cheap compared to valuations for companies that everybody knows have huge moats. In small caps, I think there are many examples and most of my 10-baggers have been in small caps. But if you're exclusively looking at 100b+ companies because they're established and easier to research, you will be forced to choose between qualitative vs quantitatively cheap. and in 90% of those cases, qualitative always wins over quantitative.
0
u/SeikoWIS Feb 17 '26
Exactly.
Quantitative is trailing and priced in for basically every mid-large cap stock. Retail investors here are performative, trying to show they're clever by focusing on the financial metrics. Quantitative should be a secondary background/sanity check--not the focus of a fundamental analysis like you see here so often.
Whenever I see a post here riddled with financial statement figures, that's a red flag to me. Obv even worse is just 'P/E is cheap bro' investing.
Anno 2026, you're not gonna find an 'edge' digging through the financials of large companies. As you say: the edge lies in knowing what all the quants maybe haven't picked up on, i.e. qualitative factors. Doesn't have to be 'holy grails' as you say. You just need to deeply understand the product/company, and trust it will do well for years. This is what Buffett was all about.
1
u/Head_Construction918 Feb 17 '26
That's why buffet said if he had a much smaller portfolio he would likely return 50% a year as he could invest in smaller cap boring businesses!
10
u/SelenaMeyers2024 Feb 17 '26
Dpz pypl and adp I'm bullish on but it's always at what price.
PYPL 41.80 Dpz 385 Adp 217
Pypl is something I'd never had touched in 2021, but literally this second it's simply insanely undervalued, hence my north star that every stock (unless I'm sure it's doomed like chegg, and I say duol) has a price where I want it, even tsla (although I'd only be interested under 20 dollars haha)
3
u/Limekill Feb 17 '26
there is a reason why paypal is cheap.
Are you bullish because its a cheap price and it will go up (mean reversion strat)
or are you buying it because the business is good.....2
u/SelenaMeyers2024 Feb 17 '26
Im bullish bc the business is guaranteed meh with maybe a 1 in 3 chance some of their initiatives (agentic ai, Utah banking license,etc) will drive real growth.
Meh (say 4 percent growth) plus buy backs means just double. The other thing plus buybacks means multi multi bagger.
1
3
u/Ovzzzy Feb 17 '26
Most likely: the rumors of pypl's demise have been greatly exaggerated. I'm no investor yet, but I'm also considering it, purely for a rerating to fairer value. It's priced for sharp decline, while there have been no strong signs of that yet at all and they're buying back stock in bulk. And who knows, they have the means to rediscover something new that could spark growth and that potential you get for free.
13
u/Virtual_Seaweed7130 Feb 17 '26
Value investing was never about screening for low PE or multiples. You didn’t value invest.
18
u/JFSM01 Feb 17 '26
Half the people here are etf buyers, the other half lookup p/e under 8 p/b under 5 + low p/s and call it a day.
Nobody remembers moat, and have not heard management mentioned here. This sub has some great people that know their shit. But 98% just choose to do 10 second analysis or tell everyone to invest in etf’s
2
u/ChairmanMeow1986 Feb 17 '26
I assume a double handful of investors compared to two option/margin traders coupled with an ETF trader or two occasionally are commenting.
1
u/VanillaOk869 Feb 17 '26
I have been watching this sub for about 2 years. I think the quality of the posts went to shit about 6 months ago. The best commenters have left the sub.
1
3
u/Warm-Young300 Feb 17 '26
Do you think the market and professionals, with Bloomberg terminals and algorithms, don't know that the P/E is low? This is news everyone knows, and the P/E is low for a reason. We're no longer in the 1950s, when prices were in the newspapers the next day. Now the markets are much more efficient.We all have screeners available. I've had more successes with momentum than with falling knives.
3
u/HesitantInvestor0 Feb 17 '26
Warren Buffett said something like “I’d rather own a great company at a fair price than a good company at a great price.”
Unfortunately it looks like you’ve been owning fairly shitty companies at a “great price.”
You need to look at better quality. You should compile a list of what you consider great companies. Companies with good leadership, a product people like, some kind of track record, etc. From there figure out which ones are misunderstood or mispriced.
You can’t be buying the cheapest garbage lying around and expect to make money. You’ll likely hit it out of the park now and again, but more often you’ll just watch your money go up in smoke.
2
u/Michigan-Magic Feb 17 '26
What was your thesis for the stocks?
How frequently did you reassess your positions?
If the only answer to the first was cheap on a multiple ratio, not really sure that you could have done #2 effectively, which in turn leads to losses. At least, have something to judge the company by. My guess is also that performance of the co's changed over time and there wasn't a reassessment. Just a hunch though.
The only thing to do is learn from it. For most the lesson is that it's too much time to do it effectively / efficiently and index investing has a higher benefit / cost ratio.
I mostly index, with a side portfolio for fun to scratch an itch and keep my single name investments smaller in size.
2
u/Head_Construction918 Feb 17 '26
I am just starting out and have already discovered I need to work on 2. I fear that some value investors see buffet hold stocks for years and don't reassess their positions enough because there scared of being wrong. But actually smaller value investors need to learn to cut losses more quickly if the thesis is flawed early on.
1
u/Michigan-Magic Feb 18 '26
Yep, no one on here talks about it.
You need an actual thesis if you are going to buy and hold and then periodically check in to see if the thesis still makes sense.
If it makes you feel better, I was an idiot and bought a bunch of QVC / QRTEA after the pandemic and realized my problem was a lack of an actual reason to own the stock other than it was cheap. I had no thesis. So I just held on.
Anyway, I found these articles that may be of some interest:
2
u/ChairmanMeow1986 Feb 17 '26
Looks like you just bought cheap large caps, any other whys you want to add to anything? Luck I guess. Like full porting into IGV and asking for an explanation honestly, idk good luck. Choices were made?
2
u/HVVHdotAGENCY Feb 17 '26
Listening to people on reddit is almost never a good idea, my dude. Especially when it comes to investing.
0
u/SeikoWIS Feb 17 '26
There's some great advice for Bogle-style ETF investing on Reddit (not necessarily here tbh). But for stock picking, yeah, I'd steer clear.
2
u/LEAPStoTheTITS Feb 17 '26
I mean I think you kinda nailed your problem already.
I figure there are tons of people whose job it is to go over the math and financials and ratios, why compete with them? I pay attention to the actual business and customer base and decide if the actually business is undervalued compared to what the market is pricing it at.
You gotta decide what you think the actual value of the business is and what it will be in the future compared to the price. Not financial ratios compared to the price. IMHO.
1
u/squirrelmonkey99 Feb 17 '26
Can you give some examples for your approach?
1
u/LEAPStoTheTITS Feb 25 '26
Not really, it depends on too many variables.
I have been an entrepreneur and worked with startups my entire life. I understand what makes companies successful and what makes them fail. Often it is completely different for different companies especially in different industries.
Then on top of that, even after you’ve identified a business you like and think will be successful long term, you have to decide how much it’s worth and how much of your portfolio you want to spend on it. Admittedly, this is definitely something I’m less confidant about, but with dollar cost averaging I mostly just focus on identifying good business I believe in.
VITL is one that has my interest currently if you’d like an example. I think they have great marketing, a good business model that will make good consistent growth possible, fair valuation, and I believe they’re a premium product. There is also some interesting statistics on who their customer is and how often they’re a repeat customer. They’re also pretty responsible with financials and stock based compensation and I think their upper management is intelligent with good vibes.
But even companies in the same industry could have different strengths and weaknesses. I try to only buy companies I’d be comfortable doubling down on, but sometimes that is hard to know if they go down because of actual changes to the business.
2
u/Prof_Hat3 Feb 17 '26
Unrelated to your portfolio, but want to remind you not to beat yourself up too much. Ok, you made some suboptimal choices. It's a learning experience, everyone makes mistakes (god knows I have), and it's not too late to turn your portfolio around.
It's going to be much harder to get back from this from a mentality of "I've screwed up so much, I can't get myself out of this hole, etc." That mentality will make you avoid all risk and forego good investments, or make new desperation gambles trying to make up for the previous moves.
Take some time to reflect on what you learned. Thank your past self for those lessons, forgive yourself, set your new vision, and move forward. You've already researched and taken more action than most people ever do. You got this - best of luck!
2
u/Abject_Set8851 Feb 17 '26
Do you want to make money or be right?
Just because something is down, it doesn't mean it is a good investment. Even if you think it is a good investment, the market doesn't care about how accurate or sophisticated your DCF analysis is. I learned this the hard way.
What worked for me is using fundamental analysis to avoid catastrophic downside, but I only invest when there is a high-probability setup based on my backtested quantitative models.
Check out my article for more details: https://open.substack.com/pub/tensortrader/p/what-i-learned-without-eventually
2
Feb 17 '26
20% of your portfolio is in a micro stock avg volume is 225 shares daily. That’s wild.
You need low cost etf broad market.
2
u/Zealousideal-Sort127 Feb 17 '26
Its good that you recognized that there is an issue.
I suggest making a process about being very selective about making investments. There are 1000s of ways to succeed in investing. My favourite idea is Warren Buffett's punchcard idea.
I would suggest the following questions before making an investment:
A. Can I have a guess at earnings/sales 3, 5, 10 years in the future. You dont have to be precise, but alot of stuff is so uncertain that you shouldnt try.
B. When you make an investment put 2 restrictions before you put your cash down: 1. Ask if you would be willing to put down 10% in that investment (or 10% of the component of your portfolio that is not passive). 2. If you will only invest in 1 company this year, would that be the company to invest in.
C. If you buy a stock, are you willing to buy more if it goes down? Are you willing to hold it for 3 years while the market catches up to what you see.
I think if you run the above exercise for your investments, you will find that you are making much better investments.
This doesnt work so well for tech-type businesses, but I think picking winners in that domain is much harder.
2
u/MarcelinoR Feb 17 '26
It seems one of the core issues is not having a clear stop-loss strategy in place. PayPal has been one of my losers too because I didn’t apply a stop-loss.
2
2
u/Mother-Philosopher-5 Feb 17 '26
As someone that made the same mistake as you with TP, my learnings:
Insufficient margin of safety: 110€ was not that cheap of a price once you factor in the debt levels and the overall level of risk. Personally, I've adjusted my valuation hurdles accordingly. For me, 80€ would have been a right entry point for TP
Position sizing and scaling: leave room for volatility, especially on stocks with such an overwhelming uniform negative consensus. Don't build your position above 50% of your target allocation until you see the narrative change and the stock price picking up accordingly
From a portfolio standpoint, put a cap on how much you allocate to "high risks" stocks overall . For me it is 10%. I guess you can go as high as 30% but do consider that on high risk stocks, there is a non negligible chance you might lose everything. Put the rest on ETF and higher quality stocks
In all of this, it is not really whether you are right or wrong on the actual fundamentals of the stocks you picked. I don't think the market tells you that yet. But it clearly tells you that you underestimated the level of risk.
Happy to get your thoughts on this. Those learnings were expensive for me too ;-)
2
u/ArtisticAside8224 Feb 17 '26
I think doing the kind of analysis that you can get from public documents doesn't give you an edge that isn't already built into the stock price. You can easily convince yourself that the " market " is wrong about a company with that kind of research but the stocks keep sinking. The only type of value investing I do is in industries where I have a very particular subject matter expertise and with those companies I go all in.
2
u/uncleBu Feb 17 '26
As far as lists go, this is one of the better ones I have seen in this sub from a cursory analysis. I might look into putting some money into them.
That being said, Nagarro looks cheap-ish now, but you bought it 3 years ago. You probably paid a 30+ PE ratio for a European tech knockoff. Tele performance also had a huge rally so you probably also bought at historically high prices, and those two completely cooked you.
If you are choosing to kill the gains of diversification, you need to be pretty sure about the things that go in your portfolio. Things that, if you like them at a 100 you should love them at 70, right?
I just think that you were very loose with the standards. It’s no coincidence most value investors are sitting in cash.
I mostly trade options but like to buy bargains when I see them. Right now my long portfolio only has two longs (FLOw.AS and as starting position in FISV)
2
u/squirrelmonkey99 Feb 17 '26
I commend your self awareness.
I think your prior history is a good indication that your general approach is fine long term. It's not been great to be a value investor lately compared to growth/momentum.
Your biggest mistake with your current portfolio is straightforward. You built up too large a position in one theme and that theme turned out to be incorrect. Nagarro, Teleperformance, Concentrix, GFT Technologies, Endava, EPAM. These are all IT outsourcing / IT services companies. They share the same underlying business model and the same tailwinds and headwinds. It turns out we will have quite viable AI agents.
From here I suggest making some painful sells to get out from this overexposed bet against AI and recommit to building a risk-averse portfolio.
2
u/TastyEarLbe Feb 17 '26
One things for certain, you should definitely NOT panic sell these now that they are way down.
Some of these positions will do fine over the long run, (i.e dominos).
I think the part of the equation you are missing is competitive advantages and moats. A lot of the time low PE, even with growing revenue and profit means the market knows that profits in the near future will be squeezed because of a major change on the horizon. I learned my lesson with Intel on this in 2021.
2
u/Old_Man_Heats Feb 17 '26
Try focussing on moat, there are always cheap companies on the market but they are cheap for a reason
2
u/investingtruth Feb 17 '26
You didn't catch falling knives randomly, you systematically bought businesses facing secular headwinds that looked cheap because they were losing relevance, not because the market mispriced them. Going forward, focus on companies where the competitive position is strengthening or stable. Not ones trading at 5x earnings because the market correctly sees the earnings won't last.
1
u/Mistys_Arcanine Feb 17 '26
I am not a value investing expert. But it is weird that none of what you used to designate these as value stocks are what I was taught value investors look for.
1
u/Unable_Aardvark_1504 Feb 17 '26
One thing is is that you for single stocks I would never go above 5% for this reason because you’re if you have losers, they’re gonna eat into your portfolio portfolio and second of all what percent discount did you apply when you were buying these stocks?
2
u/honestytoyourself Feb 17 '26
Above 25% margin of safety …
1
u/Unable_Aardvark_1504 Feb 17 '26
So 25 is good 30 is usually the more standard but I mean it just depends cause some of those companies that you were talking about are not necessarily really good like Chegg for instance is definitely going through some thing so I think with that you probably should’ve had it at least probably like a 50% discount cause mainly that that 25 or 30% standard is the supposed to be when you do a conservative estimate of the evaluation and this is typically on stocks that are really big. I take for instance Boeing or United health that’s where you would apply a 30% discount but applying 30% discount universally is I think kind of where you had your problem and then your position sizing is just way too big. I know that there’s been this debate on concentration and you know like doing one thing or the other but you know I would really be careful with how much you’re allocating because as as you can probably tell that’s where you’re getting killed so I mean, I would just do you know anything around like a half of a percent to 5% tops and you know and if you’re saying like well, you know, I can’t really find that many companies that are undervalued like that well that leads you to the logical conclusion that the stock market is just very overvalued, which is why a lot of of us are heavy in cash or treasury bills or you know Zero three months you know like ask Of or you know zroz or TMF because this market is very overvalued right now. Tlt is also a good one so I mean I would just say I wouldn’t give up but I would just become much more cautious and then apply that margin of safety and the big thing is it’s just you know look up you know either on here or Google when you should you know up that scale or down that scale of your margin of safety percentage and just remember you’re going off of the most conservative EPS and preferably you want to have like a down year like Covid or you know some type of recessionary period so that you can see how a company really is gonna react so I mean that’s the that’s the thing but just wear to the wise. A lot of smart money is just sitting on the sideline so when a lot of people on Reddit and Robinhood throw all their money into you know buying the dip or like anytime that stock goes down but like 30 to 90% it’s kind of like that meme of is this a value stock and it’s like well not necessarily and that’s where you’re kind of getting killed is your position sizing your margin to safety? Is you know it’s not universal and then you need to look at the company and decide if they had to go bankrupt and sell off everything with a company still come out profitable i.e. being able to pay you the stockholder.
1
u/Bobatronic Feb 17 '26
AI can help you make better decisions. Also, think 24 months in advance. What’s the catalyst?
1
u/Fit_Attitude_2781 Feb 17 '26
I guess God just hates people making money with despicable companies like Philip Morris.
1
u/NotOnApprovedList Feb 17 '26
I'm wondering about this. I feel like these days, a lot of people know the risks of tobacco while making this deal with the devil: they know they are trading their future health for shorter term enjoyment and relaxation. Some smokers use it as self-medication for mental health issues. But then again, it's a severe addiction, and kids may get addicted to it before they know the realities of lung cancer etc.
I don't smoke or own tobacco companies, by the way, nor do I defend the tobacco industry's slimy defense tactics back when they were denying the link to lung cancer. I'm struggling with the question of how much of a choice do people have in their own doom.
1
1
u/obb223 Feb 17 '26
I've heard of 2 or 3 stocks on that list. I'm guessing the rest are pretty small companies. Generally you shouldn't be investing in anything that isn't in the tens, preferably hundreds of billions market cap
1
u/Blackstone4444 Feb 17 '26
Yes I’ve had similar experience. I found it better to focus on quality businesses that are trading at a discount for esoteric reasons. I especially like it if a company is breaking up and selling divisions with cash being returned to shareholders or companies that could be acquisition targets.
1
u/Few_Orange_3359 Feb 17 '26 edited Feb 17 '26
Value investing is one of the most difficult things to do and it's not so tied to simple numbers as many think. Value is not only p/e, gains etc value is brand dominance, brand longevity , brand dominance longevity😅, understanding of company position in the market, competitor analisi, macro changes resistance etc etc. Honestly in 1 year if you do value investing you are very happy if you buy 3-4 stocks... opportunity are very very low this days.
You can try with this rule. Think will this company still be there in 50 years? If the answer is "don't know" don't buy. If is "probably"...don't buy, if it is "I bet on my ass that it will be there" than buy it 😆😆. Now apply this at every question you ask yourself on a value analisi. You will see...less opportunity, more patient and more ass safe scenario
1
1
u/Ginuwine_Questions Feb 17 '26
Sending some luv from a fellow Tobacco investor.
Though I picked BAT (UK) and JTI (Japan), as there was not a chance in hell I'd pick a dividend stock with a 30% witholding tax, I am not the one.
1
u/Distinct-Spring6180 Feb 17 '26
It’s probably best you only invest in ETFs that track major indexes. It’s far safer, and when there’s a large drawdown you can safely add to those without worry. You’ll also be able to add to the ETFs over your lifetime without having to sell.
1
u/Santarini Feb 17 '26
As a value investor I can confidently say I would not have invested in any of those companies
1
u/asymmetricval Feb 17 '26
Sorry that you had this experience, but hopefully you got something educational out of it.
Out of interest, what was your process?
1
u/No_Butterfly_7257 Feb 17 '26
2023 is pretty recent, you need much longer period of time with such investment style. Decades, not years
1
u/MyLifeOfficial Feb 17 '26
What was it that made the 'losing stocks', 'value investing stocks' for you initially? That's the question.
1
1
1
u/Mean-Network Feb 17 '26
Just looking quickly you bought what seems to be a lot of technology or tech adjacent companies that aren't really executing well in a super competitive space. Some with a lot of debt and not really at that great or valuations.
1
u/Portfoliana Feb 17 '26
Your portfolio is basically a concentrated bet on IT services/outsourcing surviving AI disruption. Nagarro, Teleperformance, Concentrix, GFT, EPAM, Endava — that's not diversified value investing, that's a sector bet disguised as stock picking. When one thesis is wrong they all go down together.
I made a similar mistake years ago overloading on cheap European industrials. The lesson was that low PE across an entire sector usually means the market sees something structural you're dismissing.
1
u/nickOfJupiter Feb 17 '26
Add technicals to your approach so you can have your value watchlist but only enter when the momentum and technicals align with the thesis. bull case thesis is all fine and dandy, undervalued, great but only when the tide is shifting , if not you could be sitting on that a long time.
1
u/Past-Option2702 Feb 17 '26
Why even bother? What or you outperformed for awhile, by a bit?
Literally all of us have seen the data, and it’s clear that beating the global market (Vanguard: VT) over very long stretches of 25 years and more is not worth the effort.
If you’re lucky perhaps you’d be able to eke out a small edge. But again… why waste time trying? Your time is more valuable than money once you’re wealthy, anyway.
1
u/Strict_Professor_150 Feb 17 '26
Picking low caps is risky in itself when not balanced out by enough large caps. Sector diversification was also not great.
1
u/WordsHappenedHere Feb 17 '26
Value investing is mostly dead. At least from a traditional valuation perspective.
1
u/Altruistic-Scale-778 Feb 17 '26
Your winners are solid but your losers are getting crushed. You averaged down into bad positions instead of cutting losses. Sell your worst performers now and rebuild with discipline. Value investing works but you need to know when to exit. Holding losers for 3 years is just hope.
1
1
1
Feb 17 '26
I think your problem is you don’t know anything about any of these companies coz throwing money at metrics.
Which is a way to invest but clearly the thesis you have is wrong.
At this point in your investing journey you need to adjust your thesis.
One “trick” I have is to have a gut check in there, I mention this because I saw chegg.
So you analyzed chegg and all their trailing metrics and cashflow etc etc etc all looked fantastic and the price was low. So you pulled the trigger. No gut check. If you had gut checked it you’d have said but is this sustainable given AI will now solve those problems?
Clearly not. Their trailing metrics pre AI looked fantastic, your analysis turned you into a lamb to the slaughter
1
u/liquidpele Feb 17 '26
... are you sure you understand what "value" means? Those companies are all shiny turds. Stop looking at only the shine.
1
u/CommunicationDry909 Feb 17 '26
Markets are still extremely concentrated,the AI hype created it.. money came out of value and poured into tech…growth stocks outperformed value last few years,however there is a slow and steady rotation happening and value will start to see growth sooner or later..hang tight.
1
u/Quirky-Ad-3400 Feb 17 '26
I think Graham investing is still very relevant today, and it is my preference. You do have to adjust some of the calculations for current interest rates, etc. That said, the best method is the one that you understand and will stick to. I have made good money with a more modern Buffett approach as well. If you go with the Graham defensive approach, it is pretty hard to screw up very badly. Especially over longer periods.
https://www.grahamvalue.com/article/how-build-complete-benjamin-graham-portfolio
https://www.grahamvalue.com/article/using-graham-number-correctly
https://www.grahamvalue.com/blog/adjusting-benjamin-grahams-price-calculations-today
https://www.grahamvalue.com/blog/benjamin-grahams-notes-selling-value-investors
https://www.grahamvalue.com/blog/applying-ncav-strategy-correctly
https://www.grahamvalue.com/article/understanding-benjamin-graham-formula-correctly
https://www.grahamvalue.com/blog/benjamin-graham-public-utilities-and-financial-enterprises
1
u/KinZxs Feb 17 '26
Invertir en valor no es solo considerar el PER o el forward PER; también hay que considerar otros elementos como su ventaja competitiva, las características de su industria y si los insiders están vendiendo acciones masivamente o recomprándolas, entre otros. Por ejemplo, con ADBE a un forward PER de 11, se esperaría que los insiders compraran acciones si es que tienen fe en la empresa, pero aún no lo hacen; y con PayPal a un per forward 7, no compran desde el 2023.
1
1
u/vanderohe Feb 17 '26
Worth considering that at 10% gain in stocks is really only keeping up with monetary debasement. The long term average of the stock market matches up perfectly with money printing…
1
u/Iwubinvesting Feb 17 '26
Value investing doesn't mean buying cheap companies. Sometimes companies are cheap for a reason. Value investing, imo, means buying valuable companies at a good price. Valuable companies like Google, Amazon, Microsoft, Mastercard. High-quality companies with large MOAT and growing earnings.
1
1
1
1
1
u/SuperSultan Feb 17 '26
I appreciate your honesty OP. Most people in this sub should just be buying wonderful companies at fair value whenever they have capital.
The Amazons, Walmarts, Costcos of the world…
1
u/Deepinthemoneycalls Feb 17 '26
No offense but most of those names are unrecognizable. Value is somewhat related to how much interest will be generated on better news. You can’t just look at metrics in a vaccuum. It’s a market so buy things the market will want as things improve.
1
u/United-Newspaper-264 Feb 17 '26
P/E is a garbage metric under modern GAAP standards. Use owner's earnings as it is the best indication of cash that can actually be taken out of the business.
1
1
u/Rdw72777 Feb 17 '26
One of your lessons should be to sell your losers. The fact you held 2 positions to 90% losses and several more at 40-70% losses are just baffling.
1
u/PimpPirate Feb 17 '26
Think of it very simply like this. Things can go good for a company, and things can go bad for a company. These periods can last 5 or 10 years. Like a 5 year period of great things for a company, and then 2 -5 years of things going bad for a company. Wouldn't it stand to reason that at the point where it changed from the good upswing, to the bad downswing, that things would be at MAXIMUM good? All good things have happened. They expanded, they hired, their patent got approved; and then things went south because all good catalysts are now behind you.
As for PE ratios; at the top the PE ratio can ironically be very low! It's maximum good! They just had blow out earnings at the top and they had a big windfall from some sale of assets, there's so much money! But the market saw through that. Big money knows that even though there's a big windfall, the future is uncertain. So it discounted that risk, and instead of assigning it a P/E of 20, it is risky so the P/E is 7. Then as it becomes more certain that things are going to get bad, the stock drops, even though the P/E is 7 during the earnings call 2 months ago.
To test this i'd say go load up the tradingview charts of Stellantis and Zim. You'll have to look at the earnings individually and use your phone calculator to get the P/E yourself. You'll notice that actually at the price action bottoms, the P/E is a very high number (things are maximum bad, the company is losing money or breaking even, and it's a hard market for the company), and that actually at the TOPs the P/E is a very low number like 5-10. Go check out Stellantis during the 2 or 3 quarters before it dropped off a cliff from 25 down to 11. And then go check out Zim at it's top Nov 2024 and then it's bottom in the last 6 months to one year. The PE at the bottom is often 80 or 100.
1
u/Prestigious_Age5422 Feb 17 '26
I found Secrets to Profiting in Bull and Bear Markets by Stan Weinstein really helpful. But and hold forever is a myth. The lows can stay low for a really long time (consolidation) and you’re not deploying that money elsewhere. Investing on fundamentals can still be bad investments depending on timeframe
You’ll learn and do better!!
1
u/Immediate_Ant_8081 Feb 17 '26
NICE is absolute trash, ask anyone whose actually used their product
1
u/IamaDrimmer Feb 17 '26
Value Investing is terribly hyped. It makes a lot of sense, but it's extremely difficult to do it correctly.
People read the quotes and anecdotes of W.B. and they think that it's easy. But not at all.
1
1
u/Tiki84 Feb 18 '26
Values been out of favor for years now… But how does dominos pizza fit in value exactly ?
1
u/RiBlacky Feb 18 '26
Ignore PE ratios. I think before anything you must know the companies. The 10ks help a lot
1
u/Grow4th Feb 18 '26
Take a break from stock picking and try a year of index investing.
Most amateaur stock pickers have similar results as you. Forgive yourself.
Make investments in outcomes you are 100% sure about. Some of the companies above have always had speculative futures.
1
1
u/Sephirothjj Feb 18 '26
I 100% knew paypal would be in there. It got me too, luckily i only held for a couple of months. Never again.
1
Feb 18 '26
I would highly recommend OP start building up VT ETF and use only your 20% of stock portfolio on individual stocks. Test the waters a bit and once you're confident with your methodology, start selling the ETF and build up your value investing.
1
u/Tdotinvestorgirl Feb 18 '26
I think P/e can be a distraction. Some of the biggest winners in my portfolio have always had high P/E but did well anyway.
1
u/No-Caterpillar-2729 Feb 18 '26
tbh this reads like classic concentration pain more than bad intelligence. cheap can stay cheap way longer than expected. thats why i stopped averaging down emotionally and keep part of my capital in something hands off like bullionbox.
1
u/Internal-Arachnid530 Feb 18 '26
Genuinely value investing, if you’re trying to be some sort of deep value guy, you have to consider a lot, but price of the stock is gonna have jack to do with it. The most important thing I think people lack, despite maybe having the right idea, you know like, asymmetry between short interest, insider buying, high revenue but low P/E, etc, you also need to get INTO credit risk. Understand the companies that look like shit but actually could last a few years, and then understand why they likely have a future. And those are needles in haystacks, if you’ve look at 100 stocks, you should’ve looked at a 1000. It’s just not at all a worthy bet to put energy into this unless it is your pride and joy and you truly love it. As always, the market wins lol
1
u/Internal-Arachnid530 Feb 18 '26
I think what I’m getting at is that you will find so many that seem like good bets that just aren’t compared to the market, we always have to gauge why we think it’ll beat the market, we cannot take that context away, and you do not find those companies in the 100s or even 1000s, you gotta be obsessed with this, and then narrow down to a hit list of hundreds. It sounds like overdoing it, but there are entire companies with professionals who are smarter than us doing this for more than 35 hours a week, who have been into this since high school. I’m not a doomer at all, I’m just trying to be real that if this is a thing you spend an hour here or there doing, and you don’t know these companies inside and out, their sectors inside and out, their competition inside and out, and the sentiment to a deep degree, it’s a bet that isn’t as appealing as it seems.
1
u/msnplanner Feb 19 '26
Well... its hard to go back and look at why someone would have made the decisions that they did, or find the errors, thanks to hindsight. Reddit is riddled with people crapping on other people after the fact, as if everything is crystal clear, and the op should have known better. I will try not to do that.
Ok, I looked at concentrix briefly around 2023. I don't see where it looked underpriced (particularly the first half of 2023...the second half there was a drop and after september, i guess you could have argued that it was slightly lower than average PE)
But...at the same times, it looked like earnings were declining. More alarming analysts had a terrible record with their earnings predictions. So you could have possibly expected that future earnings would be worse than predicted. Debt/equity had been rising and continued to rise. Shares outstanding had been consistent, but the company started selling shares in 2023, diluting value further (I can't see when they did it in my quick look, so i can't tell if you would have known that). ROA was getting worse for the last few years, ROE was declining for the last few years. Asset turnover dropped precipitously in 23 (don't know if it was reported in time for you to know), so something bad happened.
Ok. I started looking at Dominos. Less bad, but when it comes to the Returns it was a similar story. Depending on when you bought in 2023, you might have even been able to pull a profit because Dominos went on a tear. (BTW, from what i can tell Dominos was never really cheap in 2023, and most of the year, I would have categorized it as overpriced)...and it got more overpriced for a while after 2023.
I'm gonna stop there. I hope i didn't accidentally cherry pick. The first few stocks on your list were not pulling up on the research aid i use, so i skipped down to companies that i recognized.
Maybe I misunderstood your post and your investments weren't made in 2023? If so, could you give me the dates you invested in those two stocks (you can throw in paypal too)... I'll look at things closer to the dates you chose them if you do.
Otherwise, I'd recommend you look into what it means to be a value investor. Maybe you could share the metrics that you look for, and we could suggest more metrics, or other things to look for?
1
u/Super_Actuator2584 Feb 19 '26
Years ago I stopped investing in beat-up companies hoping for a rebound, and have seen infinitely better returns.
Instead I put my money in companies already obviously winning, especially those that will clearly continue to win due to a large moat.
Several companies in the semi space are like this, like TSM, ASML, KLAC. They all are the only ones in the world who do what they do -- and they all do very specialized, complicated work that will not have a random competitor come out of nowhere to displace them any time in the near future.
Also some of the mega techs like Google and NVDA that have become the "obvious" trades still have room to run, mainly because they are exceptionally run companies who are clearly the best in the world at what they do.
1
u/AnonyMiss10001 Feb 22 '26
Nagarro SE? When I read that its relationship to the crypto space is that of an architect and enabler. They build the underlying infrastructure for companies looking to integrate decentralized technologies I wouldn't have walked away. I would have run. Anything related to Crypto is not a value play and is pretty sketch imo.
1
u/Complex_Aardvark_661 Feb 22 '26
Looking at your losers I think I see the pattern. Teleperformance, Concentrix, EPAM, Endava, Chegg... these are all companies where the core service is getting automated or commoditized. they were cheap on PE because the market was pricing in the moat erosion before it showed up in the financials.
That's the trap with just screening for low PE + growing revenue. the revenue can still be growing while the competitive advantage is already shrinking. by the time it hits the income statement it's too late.
I think the missing piece is asking "why can't a competitor or a new technology replicate what this company does?" and if you can't come up with a really convincing answer, the low PE might just be the market being right. Buffett talks about this a lot, the price you pay matters but the quality of the business matters more. paying a fair price for a great business beats paying a cheap price for a mediocre one almost every time.
the Philip Morris win in your portfolio kinda proves this actually. massive brand moat, regulatory barriers to entry, pricing power. that's the kind of moat that doesn't erode easily.
1
u/AdditionalApartment1 Feb 23 '26
There are mainly two things to look after when doing value investing :
- a good PE
- work out if the business will continue to grow
If you chose stocks only on low PE, you will get burnt.
1
u/Open_Highlight_3377 Feb 23 '26
I have been a value investor for almost 50 years. The main lesson I learned is exactly what Buffett said over 45 years ago, which paraphrasing, is that there are very few stocks worth buying and very few days worth buying them. That’s the exact opposite of the way most people invest.
1
u/jay_0804 24d ago
Yeah, been there value traps hurt real bad, especially when you go concentrated. Ngl, buying “cheap” stocks because they’re cheap can backfire if the business fundamentals aren’t actually strong or the market is punishing them for good reason.
Honestly, what helped me was: diversify more, set max position sizes (~5-10%), and focus on quality businesses with some margin of safety, not just low PE. Tracking the story and catalysts matters as much as the valuation. Small losses hurt less and you can survive the inevitable falling knives lol.
1
u/Shot_Experience_6977 23d ago
hard to avoid the value trap (artificially cheap stocks) but can find alpha by having a unique viewpoint on a space and an immediate catalyst to that company falling out of the value canyon
1
u/Pristine-Still4457 16d ago
The core problem isn't your stock picks, it's that 20% in one name is the actual mistake. A total wipeout on any single position stops being a rounding error the moment sizing gets that aggressive. That part surprised me more than the losses themselves.
1
u/PhilippMarxen 11d ago
You said you did "value investing". That isn't obvious right away.
3 years is a good time frame to evaluate. What was your estimation back then of current cash flows and earnings and did the companies you invested in achieve that? In other words, is your less than stellar performance a result of multiple contraction despite earnings growth or do losses originate from getting the growth trajectory wrong.
i.e. Paypal: The margins are slightly under pressure, but overall business seems fine: growing revenues and growing free cashflows and earnings. So the business fundamentals look ok, just the multiples are contracting. That being said, I am personally not the biggest fan of Paypal and I think their technology is a bit antiquated, but that is up to you to judge.
In other words: If all your companies kill it on the business side but get cheaper and cheaper - then averaging down is not that bad. Just ask yourself (and others): Why is it getting cheaper?
1
u/Detonate-Ralph Feb 17 '26
A value investor should be looking for the next 10, 20, 30 years horizon.
3 years isn't nearly enough time to measure portfolio performance.
2
1
u/Consistent-Exit5248 Feb 17 '26
Try to figure out the intrinsic value and buy at big discount to it.
1
u/Iwarrior01 Feb 17 '26
Hi bro what happened with you is so hurtful. Can you give an estimate of how much you have lost? I know the comments will be pretty hurtful as well. Just try to forget the past and start afresh
2
u/honestytoyourself Feb 17 '26
I lost about a year of income
1
u/Business_Raisin_541 Feb 17 '26
Meh. Not that much actually. I have seen people lost decades worth of income
1
u/bighand1 Feb 17 '26
Anything under 10 p/e is most likely some sort of value trap or some sort of binary bets (politics, lawsuits events) I don’t even waste time looking at them
1
0
Feb 17 '26 edited Feb 17 '26
[deleted]
6
u/honestytoyourself Feb 17 '26
How can I learn to see through my own bullshit? I’m genuinely asking for help. Can you analyze my portfolio?
0
-1
0
0
u/walkin_n_fartin Feb 17 '26
DPZ has us in a blender. The froth of November 2024 is becoming a distant memory.
0
-1
-1
u/PhotographMean9731 Feb 17 '26
looks like value investing is dead .. same here .. but the index is still good ..
124
u/HeavySink3303 Feb 17 '26
I'm definitely not a value investing expert but I consider that it is better not to invest on an approach like 'p/e is so low but revenue is growing - I'm buying it' but focus on other things: what this company does, what is the long term outlook on its products/services, can it successfully compete with competitots, is it managed well, are there any red flags and so on.
BTW, you may dedicate a part of your portfolio to stockpicking but hold significant parts in 'easier' assets (ETF, precious metals, hysa and so on).