Quotes About Valuation

I would rather buy Indian equities than the S&P 500.

If you think too-big-to-fail banks are not worthy of investment because of their impossible-to-read balance sheets, well then, don't buy them.

My own valuation moment: When I started 'Antiques Roadshow,' John Benjamin looked at my engagement ring, which is Victorian. I sat there as a visitor would and he dated it, talked me through the stone, which is an opal, and which mine it would have been from.

To know whether stocks are cheap or pricey, we typically look at price-to-earnings ratio. Valuation is a tougher question than many folks realize.

It's hard to tell which assets will be toxic. The best way to ensure that only shareholders and banks feel it is have adequate capital.

There are positives and negatives to publicly traded and private companies.

Every international at Lyon is untransferable. Until the offer surpasses by far the amount we had expected.

Since the profits that companies can earn are finite, the price that investors should be willing to pay for stocks must also be finite.

closed at $1.19 per share. Weighing the evidence objectively, the intelligent investor should conclude that IPO does not stand only for "initial public offering." More accurately, it is also shorthand for: It's Probably Overpriced, Imaginary Profits Only, Insiders' Private Opportunity, or Idiotic, Preposterous, and Outrageous.

But in other cases, making allowance for conversion rights—and the existence of stock-purchase warrants—can reduce the apparent earnings by half, or more.

Many Internet IPOs rose 1,000% or more in 1999 and early 2000; most of them lost more than 95% in the subsequent three years. How could these early gains earned by a few investors justify the massive destruction of wealth suffered by the millions who came later? Many IPOs were, in fact, deliberately underpriced to "manufacture" immediate gains that would attract more attention for the next offering.

A comparison of eToys with Toys "R" Us, Inc.—its biggest rival—is shocking. In the preceding three months, Toys "R" Us had earned $27 million in net income and had sold over 70 times more goods than eToys had sold in an entire year. And yet as Figure 17-3 shows, the stock market valued eToys at nearly $2 billion more than Toys "R" Us.

Here are some quick considerations for the intelligent investor: Is the "net pension benefit" more than 5% of the company's net income? (If so, would you still be comfortable with the company's other earnings if those pension gains went away in future years?) Is the assumed "long-term rate of return on plan assets" reasonable? (As of 2003, anything above 6.5% is implausible, while a rising rate is downright delusional.)

just as in 1929 the companion theory for the "blue chips" was that no price was too high for them because their future possibilities were limitless.

Instead, calculate a stock's price/earnings ratio yourself, using Graham's formula of current price divided by average earnings over the past three years.

The intelligent investor dreads a bull market, since it makes stocks more costly to buy.

you will be wiser to form your own ideas of the value of your holdings, based on full reports from the company about its operations and financial position.

High valuations entail high risks.

By the time everyone decides that a given industry is "obviously" the best one to invest in, the prices of its stocks have been bid up so high that its future returns have nowhere to go but down.

In the previous four quarters, Yahoo! had racked up $433 million in revenues and $34.9 million in net income. So Yahoo!'s stock was now priced at 263 times revenues and 3,264 times earnings. (Remember that a P/E ratio much above 25 made Graham grimace!)5

Is the stock market riskier today than two years ago simply because prices are higher? The answer is no." But the answer is yes. It always has been. It always will be.

This brief review indicates that the stock market's attitude toward secondary companies tends to be unrealistic and consequently to create in normal times innumerable instances of major undervaluation.

knows the price of everything, and the value of nothing.

Growth stocks are worth buying when their prices are reasonable, but when their price/earnings ratios go much above 25 or 30 the odds get ugly: