quietly building a sizable stake, page-42

A lovely post on fundamentals Camden, and tu from me. Rock solid and what I would call "the good" of the good/bad/ugly aspects of what is done with equities. Once upon a time a summary of what you mention might be expressed as the P/E ratio and a P/E of less than 6 (pick a number) was considered by fundamentals as cheap. Apologies in advance if this is oversimplifying a complex valuation process.

But what to make of inground, non-revenue earning (no E for P) equities? Well, originally, they were not able to list (via IPO) without first having a 3-5 year earnings track record. But things being what they are, speculation was born and so jumped on every one who was invited to make a killing (or otherwise) on unproven listed equities with flashy prospectuses and promises of fortunes. This goes back to 1920.

My guess (and it is purely a guess) is that what you refer to strictly applies to maybe 25% of all listed equities anywhere on the planet. What I refer to is the balance - or 75% of all equities - being the subject of speculation. Further guessing that since 1965, this method of trading has been cemented on roughly the same proportion of listed equities on every exchange. Not saying anything of the rubbish that should not be listed.

IVA is one subject to speculation, and because of this, cyclic speculation is highly lucrative to institutions and retail traders alike. I say traders to make the distinction to investors - however both depend on opportunity to create a +ve return (thinking long only). However, in 2012 it begs the question - if a single investor does not trade? Hence speculation is just as big an opportunity to provide a return to traders versus your value investing approach.

Both considerations apply equally to IVA. As a trader, to use price trends/indicators/lines/shapes or whatever you want to call them, to speculate IVA was cheap at 40c (admittedly, as did I) then see the reality of the price rise into 90c presented a handsome opportunity to realise a profit.

Realestate is no different, and is subject to the same value investing/ speculation/ flipping consideration. As long as any one person plays to their own strengths, then no method is better than the other if the desired outcome is achieved. Realestate valuations are more applicable to inground resources coupled to a changing commodity price - and like realestate, it is only worth what someone else is prepared to pay.

Understanding volatility and periodicity provides more numerous opportunities in many more stocks than does what you refer to, and I'd argue EVERY institution emplys these tactics. But still this has components of what you suggest fundamentally, coupled with cyclic opportunities borne by the fact that the P/E ratio itself explains more about speculation, than it does of anything fundamental.

You can see more on historical P/E ratios here.

As for IVA and it being represented as anything more than what it is, I'd say it isn't. So it goes for the remainder of the share market to those who embrace all apsects of the game.

Thinking aloud is all, having read your excellent post. IVA is once again cheap from a speculative point of view.