My Investing Framework as a Value Investor - Michael Jay

[@wolfofdubai]

"The stock market is filled with individuals who know the price of everything, but the value of nothing." *Phillip Fisher*

[@GenExDividendInvestor]

I agree its critical to have an investing framework (and you should give it some time to work), and then evolve it if it isn't. I often see people churning through everything, investing strategies, stocks, etc... And people are impatient... and they sell when they shouldn't.. All of these things contribute to those poor returns for the average investor... Oh well, at least they are investing and beating inflation

[@biguubtorres7907]

I appreciate ALL your work top quality. I see you stopped uploading on YT keep grinding your channel is a hidden gem.

[@MetalBum]

This is one of your best investment videos yet. Showing all the fundamentals and overall investin g Thanks Metal bum

[@koundamanee]

Well explained concepts on how to build an investment portfolio. 👍👍👍

[@royalz5225]

Thanks for the great content, unlike with many other creators in the investment field I always feel like I learn something when I watch your videos.

[@tomas-333]

Just enrolled! I've been watching your channel for about a year now, you really know your stuff!

[@CharbelSalemSLA]

Thanks. Quick one: regarding your position sizing (cash deployment strategy), it seems reasonable to start with 1% and increase gradually as the market declines assuming fundamentals are still there, but what if you invested 1% and then the market kept going up. What’s your strategy then ? Thanks

[@raosiddharth4726]

Dude thank you so much, your channel gives really good content I hope you gain a lot of subs , bless you sir

[@caeksauce8]

Great video! I'm hearing Joel Greenblatt and Howard Marks. Good stuff!

[@shaheemclarke4297]

We missed you Micheal 💪🏿💪🏿

[@MetalBum]

This video is priceless thanks great value man

[@christopherblain6156]

Wonderful topic for retail investors. Thanks Michael.

[@emmanueladah4892]

Thank you very much. You made it super clear

[@patw.6567]

im dividend investing personally thanks for your vids

[@jerodayres8234]

Great videos Michael. I just have a couple of questions on this one: For the strategic portion of your tactical asset allocation, can you elaborate on what alternative investments you invest in? Can you give some insight as to the formula or system you used to split your assets between 50% stocks and 50% cash? Is it simply broad market over / under valuation? Are you either 50% invested or 100% invested or is it a scale driven by one or more formulae?

[@newjerseynick99]

Mike - keep up the good work. Lovin the vids!

[@AlisaShevela]

Thanks a lot for this awesome overview!

[@BeyondTheStockPrice]

Welcome Back Michael Jay - Value Investing. - Devrhoid Davis from Caribbean Value Investor. @cvijamaica

[@MichaelJayValueInvesting]

Greetings!

[@aouzo3573]

Awesome investing info; you wouldn’t get this even if you paid for it - keep up the great work!

[@sc358.]

If you would consider an ETF, then I highly recommend ZIG. It essentially uses the aquirers multiple to attempt to buy fair businesses at wonderful prices using an EV to Operating Earnings type model. It is a long short but is ran by a very capable manager in Tobias Carlisle. He also combes through the picks, not a total quant approach. It really wouldn't surprise me if it averaged 15% - 25% over a 20 year period. Check out his ETF through prospectus and podcasts. I lean more towards individual stock picking myself. 42ish% cash, just happened to come to that. You may find some interest in EAF and perhaps in FCA. EAF should earn back close to its market cap through dividends and share buybacks before its contracted earnings to date are complete. A meaningful amount of debt should be paid down by then. Then it'll be worth something even if earnings come way down. Replacement cost of about $3 billion and probably would have at least a normalized retained earnings of $200 - $250 million, so a conservative 10x through the cycle will leave you with $2 - $2.5 billion EV. So that's probably the downside (ya get ur money back plus a little). The upside could be a 3X+, hard to say. I really like this one at under $13.76, $4 billion market cap ~ $6 billion EV FCA has an upcoming dividend of about 14.5% between ordinary and extrodinary, is about a 45% discount to a conservative fair value and has low downside. They most likely will be merging with PSA. Management is in good hands. Lots of industry headwinds but low probability of loosing money and good chance of attractive returns for those that are patient. MU is one to watch. Best of luck to us.

[@seanlynch8869]

Great video Michael.

[@carlbowden4712]

The usual solid info. I'd question 50/50 cash to stock as young as you are, pretty conservative. Although I do think the market is risky going into 2020 election and other reasons. Hope you keep posting regularly again

[@raudelnovais5603]

Great info , thank you Michael

[@gangouti]

Hi Michael, thank you for your informative videos! Keep it up, please! I am planning to sign up in your system to access your spreadsheets. I have a question before I do so. Is there any way I can see your performance vs the market for the last few years?

[@MichaelJayValueInvesting]

Glad you are enjoying the content! My portfolio won't be directly comparable to the SP500 since I am fairly cash heavy and invest in alternative asset classes. But since June (earliest date of trackable/published trades) the return on my individual stocks has been 13.8% vs 6.3% for the SP500. (Keep in mind this will fluctuate over time!)

[@Re3iRtH]

@@MichaelJayValueInvesting I recall you were doing this well over 1 year. Why are your trades only trackable for the last 5 months? Doesn't make sense to me.

[@phamman88]

Excellent video

[@lroyal26]

Thanks for all the information

[@daydreamer7432]

Hey ! great video as always, I have a quick question I am thinking of changing my field to become full time trader so want to know are you are you full time or part time investor ? can we do this for a living?

[@MichaelJayValueInvesting]

You shouldn't rely on investing/trading for a full time income (unless you are retired with a large enough nest egg). It is not sustainable and can cause significant pressure (and emotional mistakes) if you don't have a primary income source besides your portfolio income. I haven't met anyone who is a successful day trader who doesn't also sell a course on day trading to pay the bills.

[@daydreamer7432]

@@MichaelJayValueInvesting thank you so much for your reply, I would keep thins in mind. Happy investing !

[@leebrewer2367]

Great video 👍🏼

[@xplusziefv]

This is a really good video.

[@quietlike]

hey great stuff! what do you think about closed end funds? They have some sweet returns, but what are the risks?

[@MichaelJayValueInvesting]

Glad you enjoyed! Good question. Some of them used to be open-end funds that did very well, but then grew too big (which can make continued out performance harder) so management turned it into a close-end fund. I suspect those are the ones showing the best historical returns. One risk with close end funds is that since they trade on the market, sometimes the price will not be exactly equal to the NAV (net asset value) of the fund and will trade at a premium or discount.

[@petarz9029]

Fantastic video! Why don't you like cyclical businesses though? Sure they can test your emotions, but if you are patient enough to buy at the end of the cycle, you can see great returns in a relatively short time.

[@MichaelJayValueInvesting]

Good points! I don't mind cyclicals, I just think it is a risk worth pointing out. It can be easy to look at a low P/E cyclical and think it is value when in reality an expected contraction in earnings is priced in. LEA is one cyclical I like (high ROIC and good management) which I would like to own but am waiting to see if I can pick it up during the next downturn. (When it will be cheap but look bad on a trailing P/E basis).

[@petarz9029]

@@MichaelJayValueInvesting good points

[@manfredadams3252]

You should have added cloning to your stock selection methods. It is after all the one that Charlie Munger suggested. 13f 4tw.

[@Control747]

I heard that many index funds use the harmonic mean instead of the arithmetic mean when calculating P/E. Do you know what that is? In addition, the index funds through out P/Es that are too high or too low. Do you know anything about this? Welcome back, too.

[@MrRaitzi]

There is market cap weighting and even weighting in funds. Market cap has auto correction that will make safer investing as most companies lose to index and it weights company more when performance increases. This is only the simple version(as there is many ways to form an index) but it should carry out to way let's say P/E is calculated for specific ETF.

[@crispisauce]

Do you sell covered calls of your stock positions for passive income?

[@MichaelJayValueInvesting]

Most of my holdings I believe are a decent way away from their fair value. As such the covered calls would need to be pretty far OTM for me to want to sell them, and I wouldn't get much premium in that case. Plus if you sell covered calls you lose tax-advantaged dividend treatment (in the US), so I would only even consider it for my non-dividend paying stocks. It can generate extra income on some more volatile stocks that might be held for a short term trade. My focus is more long term though. Great question.

[@pennjillette9501]

how much money do you manage michael?. I manage over a million of my own. I think you are scientific and insightful but investing tougher than vlogging. can you make video of total value of your protfolio, what percent is cash and ytd return .

[@MichaelJayValueInvesting]

Yes, planning to do a full portfolio reveal at 50K subscribers! And nice job on a million plus, not quite there yet, but one day :)

[@pennjillette9501]

@@MichaelJayValueInvesting There wasn't much talent behind it. I am doctor working 12+ yrs so you know why. I regret holding too much cash this yr. Have close to 200k.

[@InvestingEducation]

Nice share

[@ichoudhury007]

Do you practice an exit strategy? I used to avoid that sort of stuff, because I myself take pride as a long-term investor. However, sometimes it’s rather unnerving to watch my investment depleting over some random tweets 🤨☺️. So , recently I started adding stop loss/stop limit exit plans across all my stocks. This is usually the lowest amount I’m willing to tolerate. Perhaps just restart back at a more tolerable cost basis while looking at other investments. I know I sort of contradict my long term strategy But in reality, I have not had to endure through one being sold yet. Maybe a safety net for possible recession while I’m not paying attention.

[@MrRaitzi]

Some sell no matter what if stock is down 15 percent. I tend to have much tighter limits on some stocks and change weighting if there is weakness in some stock and return to it later if I still see long term opportunity.

[@MichaelJayValueInvesting]

If the fundamentals and business performance are still in tack and the shares are undervalued, then I will be the one buying your shares :) Short term price drops by themselves are not a reason to sell on their own. (Maybe if you are a trader, but I don't do that as an investor.) Look at AAPL as the example in the video for instance. If you keep a long term perspective, the short term price movements don't matter (except as opportunity to buy shares cheap or sell them if they become overpriced). In a recession/downturn, everything will be hit so you can't avoid short term loss entirely. That gets into market timing which is really a question of asset allocation. You can always build more cash in your portfolio if that helps you hold on to potentially undervalued shares. Just some thoughts. Hope this perspective helps!

[@AlphaInvesting]

If your money is locked in a stock that has dropped 20% and will not get back for ten years, that’s ten years your money is not making any growth and wasting time a better system is have a 10-15% stop loss, get out and move into better assets your returns would be much better then buy and hope

[@finsimple4396]

If you're valuation methods are correct and investing in companies with strong fundamentals (income statements, balance sheets & cash flows) they wouldn't do nothing for 10 years. You can use plenty of evaluation methods to determine the strength of a business. As he said, if your evaluations are correct about a business and it drops 10-20%, it's a opportunity to buy more and therefore increase your future returns with theoretically less risk. You don't get that opportunity with a stop loss.

[@justintaylor-moneymindset4073]

Crazy how people actually lose money investing when so many different markets provide consistent and positive long-term returns, especially with all the investing resources and knowledge out there.

[@MichaelJayValueInvesting]

True! Which is why having an investing framework is so important. Very easy to make (emotional) mistakes otherwise. I certainly made my fair share early on.

[@rayhoo9555]

@@MichaelJayValueInvesting whats your take on % on REITS in a portfolio - given a value investing approach?

[@MetalBum]

👍

[@jsssm]

Just put your money in a diversified fund! Seriously people, come on.

[@Thomas-sb2fg]

One video, 4 ads. Unsub. Good luck!

[@derrickp]

Thomas Donk bye Felicia