My Net-Net Shopping List
It's a little busy around here with a houseful of family and friends expected on Thursday, and preparations for the big day have already begun. All the food has been purchased, but I still need to buy a river of wine to keep assorted personalities at bay. There is stock to be made, brine to be prepared -- and companies to evaluate and markets to watch. There's a lot of noise in the market lately, and much of it doesn't really matter to a long-term investor. At times like this, I try to ignore all the noise, focus on valuations and make sure the stock pans don't simmer dry.
So, I went searching for net-net stocks, or those close to being net-net, this morning. Over the years, both academic research and my real-world experience have shown that a portfolio selling for less than the value of net current assets is a winning strategy, regardless of market conditions and behavior. The strategy was developed by Ben Graham more than 75 years ago, and it still works today. The bonus to using this stock-picking approach is that it serves as a de facto market-timing device. When markets have sold off and stocks are unloved, there are lots of new net- net opportunities. As markets rise, there are far fewer opportunities in net- net stocks to put money to work....346 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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