Is Disney the most tempting value stock?

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nigel_ht
Posts: 890
Joined: Tue Jan 01, 2019 10:14 am

Re: Is Disney the most tempting value stock?

Post by nigel_ht » Tue May 05, 2020 2:07 pm

KlangFool wrote:
Mon May 04, 2020 6:41 pm
1130Super wrote:
Mon May 04, 2020 6:16 pm

Why does it have to go up 10X? I’d be happy at a triple in 5 years
1130Super,

Why do you think it is worth your time and effort if it triples? Show me your calculation.

KlangFool
$50K x 3 = $150K = $100K - 15% LTCG = $85K profit

That's quite a bit of ROI for the 15 minutes spent going "Holy cow, DIS is selling at $50 a share".

hoops777
Posts: 3070
Joined: Sun Apr 10, 2011 12:23 pm

Re: Is Disney the most tempting value stock?

Post by hoops777 » Tue May 05, 2020 2:25 pm

KlangFool wrote:
Tue May 05, 2020 1:37 pm
hoops777 wrote:
Tue May 05, 2020 12:42 pm

Can you explain your thinking here because it seems irrational unless I am missing something.
hoops777,

No, it is perfectly rational. It is only irrational folks do not follow this rule.

A) My main portfolio of 60/40 is returning about 7% per year.

B) In order for me to take a higher risk on the individual stock, it needs to worth my time and effort.

i) I would not put more than 5% of my portfolio into those stocks. Each stock only be 1% of my portfolio

ii) In order for the return of those stocks to matter in my overall portfolio performance, it needs to return 10X to 30X.

1% multiply by 10X = 10%. 1% X 30X = 30%.

If the stock does not change my portfolio by at least 10% to 30%, why would I do it? I should buy a lottery ticket instead. It takes less time and effort.

KlangFool
That is an interesting way to look at it.I have a lot of respect for your opinions on this forum but I think to say anyone who does not adhere to your rules on this is irrational is a bit extreme. What you are saying is that you may be willing to use 5 pct of your portfolio to buy the absolute riskiest going for broke stocks in the market, but someone doing the same thing that chooses to buy companies like Disney,Wells Fargo,Bank of America and the like, would be irrational. I think a lot of very smart,very successful people who buy such companies when their prices drop significantly would disagree.
I completely understand not wanting to buy individual stocks and I think by creating a totally unrealistic expectation like you are, it is simply a way to make sure of it. It is not great however to expect others to do the same.
K.I.S.S........so easy to say so difficult to do.

Superleaf444
Posts: 92
Joined: Tue Jul 17, 2018 9:12 am

Re: Is Disney the most tempting value stock?

Post by Superleaf444 » Tue May 05, 2020 2:51 pm

willthrill81 wrote:
Mon May 04, 2020 12:13 pm
rich126 wrote:
Mon May 04, 2020 12:08 pm
That depends on a lot of "IFs".
If a vaccine is developed.
If treatment is found.
If people want to gather in large crowds.
If Disney can maintain the high daily entrance fees.
You're focusing on the park side of their business. Most of Disney's profit comes from other activities and has for years.
I think most of this applies to most of their business model (save the fees). They currently can't make many movies or TV shows, they can't do the broadway shows, and they can't do the park thing. And, I mean, ESPN+Fox Sports is going to as big of a money bloodsucker as the theme parks.

Also Disney's profit margins have been growing from their parks for years, so it isn't anything to ignore.

If I recall correctly they often lose money on movies, because for every one Avengers they make SO MANY movies that bomb. Star Wars doesn't do that well internationally so, that isn't as big as a franchise as most think. Last year had good margins, but I don't believe 2018 had nearly as good as margins when it came to movies.

Idk, I would suspect Disney could long term crush it, but if the pandemic continues to crush movie tickets, sports and parks, then they really only have Disney+, some of their TV and Pixar. All of these are great branches of the company, but they would have to make monumental changes from a business perspective to make up for staggering losses from the other branches.

ScubaHogg
Posts: 525
Joined: Sun Nov 06, 2011 3:02 pm

Re: Is Disney the most tempting value stock?

Post by ScubaHogg » Tue May 05, 2020 2:59 pm

Wanderingwheelz wrote:
Mon May 04, 2020 11:50 am
Elysium wrote:
Mon May 04, 2020 11:34 am
Never liked Disney, felt it was over-hyped, overcrowded, bad food, long lines, poor treatment of employees and environment. We tolerate many business with the excuse that they create jobs and are good for the economy. Perhaps we don't need Disney and the economy could survive without these big boxed areas that packs in millions. Perhaps parents and children could instead enjoy our vast national parks instead and have more happiness being closer to nature than these fake happy places like Disney.

That just sums up my thinking of why Disney may not be all that essential, and therefore perhaps not a good investment.
The “grail” National Parks are more or less “packed” the same as Disney World. Go to Yellowstone in August if you don’t believe me.
At least with Disney World you can physically go year round if you don’t mind the summer heat. Yellowstone, Glacier, Yosemite, etc., are basically inaccessible large parts of the year. Now imagine all the Disney goers decided to cram into Yellowstone in July with the folks already there?
“There is no problem so bad you can’t make it worse.” - Chris Hatfield, Astronaut mantra

hirlaw
Posts: 352
Joined: Tue Sep 29, 2009 10:20 am

Re: Is Disney the most tempting value stock?

Post by hirlaw » Tue May 05, 2020 3:08 pm

This may have already been mentioned, but a NYT article quoted a leading media analyst as stating that he: "estimates that Disney Plus will lose $2 billion this year, with programming a major expense."

https://www.nytimes.com/2020/05/04/busi ... isney.html

KlangFool
Posts: 16644
Joined: Sat Oct 11, 2008 12:35 pm

Re: Is Disney the most tempting value stock?

Post by KlangFool » Tue May 05, 2020 3:22 pm

hoops777 wrote:
Tue May 05, 2020 2:25 pm
KlangFool wrote:
Tue May 05, 2020 1:37 pm
hoops777 wrote:
Tue May 05, 2020 12:42 pm

Can you explain your thinking here because it seems irrational unless I am missing something.
hoops777,

No, it is perfectly rational. It is only irrational folks do not follow this rule.

A) My main portfolio of 60/40 is returning about 7% per year.

B) In order for me to take a higher risk on the individual stock, it needs to worth my time and effort.

i) I would not put more than 5% of my portfolio into those stocks. Each stock only be 1% of my portfolio

ii) In order for the return of those stocks to matter in my overall portfolio performance, it needs to return 10X to 30X.

1% multiply by 10X = 10%. 1% X 30X = 30%.

If the stock does not change my portfolio by at least 10% to 30%, why would I do it? I should buy a lottery ticket instead. It takes less time and effort.

KlangFool
I think a lot of very smart,very successful people who buy such companies when their prices drop significantly would disagree.
hoops777,

Please show me the calculations of why it is not a lousy bet?

The math simply does not work out.

A) The individual stock has a higher risk than the total market stock index.

B) The return has to be high enough to justify the risk.

C) If the return is too low, the amount invested needs to be high enough to matter. -> Bad decision.

D) If the return is high enough (10X to 30X), 1% is more than enough.

Taking risks on an individual stock with insignificant return is a lose-lose bet.

KlangFool

KlangFool
Posts: 16644
Joined: Sat Oct 11, 2008 12:35 pm

Re: Is Disney the most tempting value stock?

Post by KlangFool » Tue May 05, 2020 3:28 pm

nigel_ht wrote:
Tue May 05, 2020 2:07 pm
KlangFool wrote:
Mon May 04, 2020 6:41 pm
1130Super wrote:
Mon May 04, 2020 6:16 pm

Why does it have to go up 10X? I’d be happy at a triple in 5 years
1130Super,

Why do you think it is worth your time and effort if it triples? Show me your calculation.

KlangFool
$50K x 3 = $150K = $100K - 15% LTCG = $85K profit

That's quite a bit of ROI for the 15 minutes spent going "Holy cow, DIS is selling at $50 a share".
nigel_ht,

If 85K over 3 years is significant to you, then 50K is a significant portion of your portfolio. Why would you want to bet 50K (a significant portion of your portfolio) on an individual stock with significantly higher risk?

KlangFool

KlangFool
Posts: 16644
Joined: Sat Oct 11, 2008 12:35 pm

Re: Is Disney the most tempting value stock?

Post by KlangFool » Tue May 05, 2020 3:42 pm

Folks,

1) In gambling on any individual stock, you need to ask the basic question.

A) If I win, how much can I win?

B) If I lose, how much can I lose?

Please note that the stock market can drop 50% at any time. So, the proper answer for (B) should be I can lose 100%. If the stock market is returning 10% per year, then, (A) needs to be significantly higher to justify the higher risk of (B).

2) Does it matter? If you are gambling on the stock in order to gain an additional 1% of your portfolio, you have a gambling problem. You should buy a lottery ticket instead.

KlangFool

nigel_ht
Posts: 890
Joined: Tue Jan 01, 2019 10:14 am

Re: Is Disney the most tempting value stock?

Post by nigel_ht » Tue May 05, 2020 4:13 pm

KlangFool wrote:
Tue May 05, 2020 3:28 pm
nigel_ht wrote:
Tue May 05, 2020 2:07 pm
KlangFool wrote:
Mon May 04, 2020 6:41 pm
1130Super wrote:
Mon May 04, 2020 6:16 pm

Why does it have to go up 10X? I’d be happy at a triple in 5 years
1130Super,

Why do you think it is worth your time and effort if it triples? Show me your calculation.

KlangFool
$50K x 3 = $150K = $100K - 15% LTCG = $85K profit

That's quite a bit of ROI for the 15 minutes spent going "Holy cow, DIS is selling at $50 a share".
nigel_ht,

If 85K over 3 years is significant to you, then 50K is a significant portion of your portfolio. Why would you want to bet 50K (a significant portion of your portfolio) on an individual stock with significantly higher risk?

KlangFool
DIS @ $50 is very little risk. Just like $8 for CCL was low risk when it was down 70% and the market was down only 30%. Can CCL or DIS go under? Yep. But it’s only a small part of the portfolio.

You’re making bogus assumptions. $85K is a nice win for the effort involved even if $50K isn’t a large part of my portfolio. It’s not like there are that many options that will have a higher ROI on $50K for the same level of risk.

KlangFool
Posts: 16644
Joined: Sat Oct 11, 2008 12:35 pm

Re: Is Disney the most tempting value stock?

Post by KlangFool » Tue May 05, 2020 4:21 pm

nigel_ht wrote:
Tue May 05, 2020 4:13 pm
KlangFool wrote:
Tue May 05, 2020 3:28 pm
nigel_ht wrote:
Tue May 05, 2020 2:07 pm
KlangFool wrote:
Mon May 04, 2020 6:41 pm
1130Super wrote:
Mon May 04, 2020 6:16 pm

Why does it have to go up 10X? I’d be happy at a triple in 5 years
1130Super,

Why do you think it is worth your time and effort if it triples? Show me your calculation.

KlangFool
$50K x 3 = $150K = $100K - 15% LTCG = $85K profit

That's quite a bit of ROI for the 15 minutes spent going "Holy cow, DIS is selling at $50 a share".
nigel_ht,

If 85K over 3 years is significant to you, then 50K is a significant portion of your portfolio. Why would you want to bet 50K (a significant portion of your portfolio) on an individual stock with significantly higher risk?

KlangFool
DIS @ $50 is very little risk. Just like $8 for CCL was low risk when it was down 70% and the market was down only 30%. Can CCL or DIS go under? Yep. But it’s only a small part of the portfolio.

You’re making bogus assumptions. $85K is a nice win for the effort involved even if $50K isn’t a large part of my portfolio. It’s not like there are that many options that will have a higher ROI on $50K for the same level of risk.
nigel_ht,

<<If 85K over 3 years is significant to you, >>

<<You’re making bogus assumptions. $85K is a nice win>>

You had proven my point. It is not a bogus assumption.


<< It’s not like there are that many options that will have a higher ROI on $50K for the same level of risk.>>

As in losing 100% of your money? A lottery ticket will have the same level of risk with a bigger possible ROI. And, you do not need 50K for that. It is only $1 to $2 with zero effort.

KlangFool

hoops777
Posts: 3070
Joined: Sun Apr 10, 2011 12:23 pm

Re: Is Disney the most tempting value stock?

Post by hoops777 » Tue May 05, 2020 4:33 pm

KlangFool wrote:
Tue May 05, 2020 3:42 pm
Folks,

1) In gambling on any individual stock, you need to ask the basic question.

A) If I win, how much can I win?

B) If I lose, how much can I lose?

Please note that the stock market can drop 50% at any time. So, the proper answer for (B) should be I can lose 100%. If the stock market is returning 10% per year, then, (A) needs to be significantly higher to justify the higher risk of (B).

2) Does it matter? If you are gambling on the stock in order to gain an additional 1% of your portfolio, you have a gambling problem. You should buy a lottery ticket instead.

KlangFool
[/quote
Delete
Last edited by hoops777 on Tue May 05, 2020 4:44 pm, edited 1 time in total.
K.I.S.S........so easy to say so difficult to do.

hoops777
Posts: 3070
Joined: Sun Apr 10, 2011 12:23 pm

Re: Is Disney the most tempting value stock?

Post by hoops777 » Tue May 05, 2020 4:42 pm

hoops777 wrote:
Tue May 05, 2020 4:33 pm
KlangFool wrote:
Tue May 05, 2020 3:42 pm
Folks,

1) In gambling on any individual stock, you need to ask the basic question.

A) If I win, how much can I win?

B) If I lose, how much can I lose?

Please note that the stock market can drop 50% at any time. So, the proper answer for (B) should be I can lose 100%. If the stock market is returning 10% per year, then, (A) needs to be significantly higher to justify the higher risk of (B).

2) Does it matter? If you are gambling on the stock in order to gain an additional 1% of your portfolio, you have a gambling problem. You should buy a lottery ticket instead.

KlangFool
You have a certain a way of evaluating the risk/return which is faulty. If I have a million dollar portfolio and choose to invest 10K in a company with a long history of excellent returns that is down 40 pct because of chaos in the total market and economy, maybe the thought of making 3 or 4000 on a 10K investment is appealing to me. I do not need it to make some ridiculous astronomical return to be worth my while.
You see this one way and one way only which is 5 pct of your portfolio has to return the same total amount as 95 pct of your portfolio to be worth your time. I am EXTREMELY confident that very few people would agree with that view. If that is your belief ,more power to you, that does not mean it is logical or rational to anyone else. Gambling problem? So I guess a list of the greatest investors in history are all gamblers and irrational? Investing in the greatest companies on earth when they are down is horrible and pure gambling.
Like I said your views are respected, but I honestly think you have extreme tunnel vision on this one.
It is one thing to say you do not believe in buying individual stocks. It is another to add the ridiculous math trying to justify your view,which is still ok for your own portfolio, until you call everyone who disagrees Irrational gamblers.
K.I.S.S........so easy to say so difficult to do.

Topic Author
whereskyle
Posts: 876
Joined: Wed Jan 29, 2020 10:29 am

Re: Is Disney the most tempting value stock?

Post by whereskyle » Tue May 05, 2020 4:47 pm

Well, earnings are out, futures show Disney under $100, and I am...

less than convinced Disney is a no-brainer value buy. I'll probably be sticking to VTSAX and VT with my purchases tomorrow.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle

KlangFool
Posts: 16644
Joined: Sat Oct 11, 2008 12:35 pm

Re: Is Disney the most tempting value stock?

Post by KlangFool » Tue May 05, 2020 5:01 pm

hoops777 wrote:
Tue May 05, 2020 4:42 pm
hoops777 wrote:
Tue May 05, 2020 4:33 pm
KlangFool wrote:
Tue May 05, 2020 3:42 pm
Folks,

1) In gambling on any individual stock, you need to ask the basic question.

A) If I win, how much can I win?

B) If I lose, how much can I lose?

Please note that the stock market can drop 50% at any time. So, the proper answer for (B) should be I can lose 100%. If the stock market is returning 10% per year, then, (A) needs to be significantly higher to justify the higher risk of (B).

2) Does it matter? If you are gambling on the stock in order to gain an additional 1% of your portfolio, you have a gambling problem. You should buy a lottery ticket instead.

KlangFool
You have a certain a way of evaluating the risk/return which is faulty. If I have a million dollar portfolio and choose to invest 10K in a company with a long history of excellent returns that is down 40 pct because of chaos in the total market and economy, maybe the thought of making 3 or 4000 on a 10K investment is appealing to me. I do not need it to make some ridiculous astronomical return to be worth my while.
You see this one way and one way only which is 5 pct of your portfolio has to return the same total amount as 95 pct of your portfolio to be worth your time. I am EXTREMELY confident that very few people would agree with that view. If that is your belief ,more power to you, that does not mean it is logical or rational to anyone else. Gambling problem? So I guess a list of the greatest investors in history are all gamblers and irrational? Investing in the greatest companies on earth when they are down is horrible and pure gambling.
Like I said your views are respected, but I honestly think you have extreme tunnel vision on this one.
It is one thing to say you do not believe in buying individual stocks. It is another to add the ridiculous math trying to justify your view,which is still ok for your own portfolio, until you call everyone who disagrees Irrational gamblers.
hoops777,

<< I am EXTREMELY confident that very few people would agree with that view. >>

And, that is a good validation of my view.

<<So I guess a list of the greatest investors in history are all gamblers and irrational? >>

And, how do that matter to you and me? I am rational enough to know that I am not one of them. Hence, imitating their behavior is a sure way to lose money.

KlangFool

quantAndHold
Posts: 4699
Joined: Thu Sep 17, 2015 10:39 pm

Re: Is Disney the most tempting value stock?

Post by quantAndHold » Tue May 05, 2020 5:04 pm

unclescrooge wrote:
Mon May 04, 2020 10:52 pm
quantAndHold wrote:
Mon May 04, 2020 9:35 pm
So nobody here seems to have run discount cash flows, except for one person who has a Python program and isn’t showing their work. A financial analysis would seem kind of important if I was arguing that Disney is a value play.
The pros have already done this, and if you haven’t, then they know more than you do.
If you run a DCF model in a stock, and the first 2 years income is zero, does it really affect the long term valuation of the stock? 🤔
That’s kind of what I’m getting at. I haven’t done it because I don’t really care. But I’m guessing you have to make some very optimistic assumptions to get this to pencil out as a value stock.
Yes, I’m really that pedantic.

quantAndHold
Posts: 4699
Joined: Thu Sep 17, 2015 10:39 pm

Re: Is Disney the most tempting value stock?

Post by quantAndHold » Tue May 05, 2020 6:43 pm

Yes, I’m really that pedantic.

nigel_ht
Posts: 890
Joined: Tue Jan 01, 2019 10:14 am

Re: Is Disney the most tempting value stock?

Post by nigel_ht » Tue May 05, 2020 7:40 pm

KlangFool wrote:
Tue May 05, 2020 4:21 pm
nigel_ht wrote:
Tue May 05, 2020 4:13 pm
KlangFool wrote:
Tue May 05, 2020 3:28 pm
nigel_ht wrote:
Tue May 05, 2020 2:07 pm
$50K x 3 = $150K = $100K - 15% LTCG = $85K profit

That's quite a bit of ROI for the 15 minutes spent going "Holy cow, DIS is selling at $50 a share".
nigel_ht,

If 85K over 3 years is significant to you, then 50K is a significant portion of your portfolio. Why would you want to bet 50K (a significant portion of your portfolio) on an individual stock with significantly higher risk?

KlangFool
DIS @ $50 is very little risk. Just like $8 for CCL was low risk when it was down 70% and the market was down only 30%. Can CCL or DIS go under? Yep. But it’s only a small part of the portfolio.

You’re making bogus assumptions. $85K is a nice win for the effort involved even if $50K isn’t a large part of my portfolio. It’s not like there are that many options that will have a higher ROI on $50K for the same level of risk.
nigel_ht,

<<If 85K over 3 years is significant to you, >>

<<You’re making bogus assumptions. $85K is a nice win>>

You had proven my point. It is not a bogus assumption.


<< It’s not like there are that many options that will have a higher ROI on $50K for the same level of risk.>>

As in losing 100% of your money? A lottery ticket will have the same level of risk with a bigger possible ROI. And, you do not need 50K for that. It is only $1 to $2 with zero effort.

KlangFool
It absolutely is a bogus assumption at every level...first, a "nice win" implies nothing about the size or importance of that win. Just that it was nice to get. I beat my buddy in a game of pool for $5 is a "nice win" not for the dollar amount but because I won. Making $100K profit (before taxes) off a $50K investment is a nice win whatever the size of your portfolio.

Second, it is really unlikely for DIS to go to zero even down 90% earnings. If the market is irrational enough for DIS to hit $50 tomorrow I'll put in $50K. That's being greedy when everyone else is fearful. The odds of losing 100% is essentially zero while the odds of DIS hitting $150 again in the future is reasonable.

Unfortunately it's really unlikely for DIS to drop to $50 tomorrow. On the other hand NCLH's statement was hardly surprising and the price dropped 20% so you never know. Most likely DIS drops into a range where it's only slightly a good deal.

Patzer
Posts: 271
Joined: Wed Jun 10, 2015 10:56 am

Re: Is Disney the most tempting value stock?

Post by Patzer » Tue May 05, 2020 7:53 pm

willthrill81 wrote:
Mon May 04, 2020 12:04 pm
I don't know why people are focusing on the parks. Disney has made more from TV, movies, and merchandise than the parks for years now. Arguably, their inability to create new content by filming and the lack of pro sports is hurting them more now than the parks being closed. Much of that should hopefully resume in a few months.
Parks are 35% of their revenue since the Fox acquisition. That is a big chunk to just be gone.

KlangFool
Posts: 16644
Joined: Sat Oct 11, 2008 12:35 pm

Re: Is Disney the most tempting value stock?

Post by KlangFool » Tue May 05, 2020 7:55 pm

nigel_ht wrote:
Tue May 05, 2020 7:40 pm


It absolutely is a bogus assumption at every level...first, a "nice win" implies nothing about the size or importance of that win. Just that it was nice to get. I beat my buddy in a game of pool for $5 is a "nice win" not for the dollar amount but because I won. Making $100K profit (before taxes) off a $50K investment is a nice win whatever the size of your portfolio.

Second, it is really unlikely for DIS to go to zero even down 90% earnings. If the market is irrational enough for DIS to hit $50 tomorrow I'll put in $50K. That's being greedy when everyone else is fearful. The odds of losing 100% is essentially zero while the odds of DIS hitting $150 again in the future is reasonable.

Unfortunately it's really unlikely for DIS to drop to $50 tomorrow. On the other hand NCLH's statement was hardly surprising and the price dropped 20% so you never know. Most likely DIS drops into a range where it's only slightly a good deal.
nigel_ht,

<<Second, it is really unlikely for DIS to go to zero even down 90% earnings.>>

So, what is your worst-case number? If the stock market can drop 50%, the DIS stock can definitely drop much more than that. So, it has to be more than 50% of 50K = 25K.

Your best case is making 85K over 3 years.

You are betting that

A) If you lose, you lose more than 25K.

B) If you win, you win 85K over 3 years.

The ratio between a win and loss is less than 4 times. In my book, that is a lousy bet.

KlangFool

nigel_ht
Posts: 890
Joined: Tue Jan 01, 2019 10:14 am

Re: Is Disney the most tempting value stock?

Post by nigel_ht » Tue May 05, 2020 8:22 pm

KlangFool wrote:
Tue May 05, 2020 7:55 pm
nigel_ht wrote:
Tue May 05, 2020 7:40 pm


It absolutely is a bogus assumption at every level...first, a "nice win" implies nothing about the size or importance of that win. Just that it was nice to get. I beat my buddy in a game of pool for $5 is a "nice win" not for the dollar amount but because I won. Making $100K profit (before taxes) off a $50K investment is a nice win whatever the size of your portfolio.

Second, it is really unlikely for DIS to go to zero even down 90% earnings. If the market is irrational enough for DIS to hit $50 tomorrow I'll put in $50K. That's being greedy when everyone else is fearful. The odds of losing 100% is essentially zero while the odds of DIS hitting $150 again in the future is reasonable.

Unfortunately it's really unlikely for DIS to drop to $50 tomorrow. On the other hand NCLH's statement was hardly surprising and the price dropped 20% so you never know. Most likely DIS drops into a range where it's only slightly a good deal.
nigel_ht,

<<Second, it is really unlikely for DIS to go to zero even down 90% earnings.>>

So, what is your worst-case number? If the stock market can drop 50%, the DIS stock can definitely drop much more than that. So, it has to be more than 50% of 50K = 25K.

Your best case is making 85K over 3 years.

You are betting that

A) If you lose, you lose more than 25K.

B) If you win, you win 85K over 3 years.

The ratio between a win and loss is less than 4 times. In my book, that is a lousy bet.

KlangFool
The 52 week low is $79, the 52 week high was $153. $50 is 65% down from peak and 35% down from the low in March.

The odds of DIS dropping to $25 is low and we're back to 2009...possible but unlikely. If it does the rest of the market is likely cratering too. If DIS hits $50 tomorrow its oversold based on what we know today.

Whether a win loss ratio is a good bet or not depends on the actual probabilities and not just the payout. The odds of a $25K loss is lower than the odds of the $100K win.

hoops777
Posts: 3070
Joined: Sun Apr 10, 2011 12:23 pm

Re: Is Disney the most tempting value stock?

Post by hoops777 » Tue May 05, 2020 8:33 pm

KlangFool wrote:
Tue May 05, 2020 5:01 pm
hoops777 wrote:
Tue May 05, 2020 4:42 pm
hoops777 wrote:
Tue May 05, 2020 4:33 pm
KlangFool wrote:
Tue May 05, 2020 3:42 pm
Folks,

1) In gambling on any individual stock, you need to ask the basic question.

A) If I win, how much can I win?

B) If I lose, how much can I lose?

Please note that the stock market can drop 50% at any time. So, the proper answer for (B) should be I can lose 100%. If the stock market is returning 10% per year, then, (A) needs to be significantly higher to justify the higher risk of (B).

2) Does it matter? If you are gambling on the stock in order to gain an additional 1% of your portfolio, you have a gambling problem. You should buy a lottery ticket instead.

KlangFool
You have a certain a way of evaluating the risk/return which is faulty. If I have a million dollar portfolio and choose to invest 10K in a company with a long history of excellent returns that is down 40 pct because of chaos in the total market and economy, maybe the thought of making 3 or 4000 on a 10K investment is appealing to me. I do not need it to make some ridiculous astronomical return to be worth my while.
You see this one way and one way only which is 5 pct of your portfolio has to return the same total amount as 95 pct of your portfolio to be worth your time. I am EXTREMELY confident that very few people would agree with that view. If that is your belief ,more power to you, that does not mean it is logical or rational to anyone else. Gambling problem? So I guess a list of the greatest investors in history are all gamblers and irrational? Investing in the greatest companies on earth when they are down is horrible and pure gambling.
Like I said your views are respected, but I honestly think you have extreme tunnel vision on this one.
It is one thing to say you do not believe in buying individual stocks. It is another to add the ridiculous math trying to justify your view,which is still ok for your own portfolio, until you call everyone who disagrees Irrational gamblers.
hoops777,

<< I am EXTREMELY confident that very few people would agree with that view. >>

And, that is a good validation of my view.

<<So I guess a list of the greatest investors in history are all gamblers and irrational? >>

And, how do that matter to you and me? I am rational enough to know that I am not one of them. Hence, imitating their behavior is a sure way to lose money.

KlangFool
Well you said it. Your opinion on this is so extreme at every level and I say this respectfully, so nonsensical, that the discussion has nowhere to go. Good luck. I am curious about a philosophy that says I am not an expert so why try to imitate the behavior of an expert. I wonder how you developed the skills you possess in your life if you did not learn from experts and very successful people. Or when it comes to investing do we throw everything in life that applies to learning in every other field out the window? You of course learned about investing from such people, but like everything else you choose who you listen too. So maybe your way is not absolute and everyone else is not irrational and gambling stupidly because they choose to see it differently.
Peace.
K.I.S.S........so easy to say so difficult to do.

1130Super
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Re: Is Disney the most tempting value stock?

Post by 1130Super » Tue May 05, 2020 10:49 pm

hoops777 wrote:
Tue May 05, 2020 8:33 pm
KlangFool wrote:
Tue May 05, 2020 5:01 pm
hoops777 wrote:
Tue May 05, 2020 4:42 pm
hoops777 wrote:
Tue May 05, 2020 4:33 pm
KlangFool wrote:
Tue May 05, 2020 3:42 pm
Folks,

1) In gambling on any individual stock, you need to ask the basic question.

A) If I win, how much can I win?

B) If I lose, how much can I lose?

Please note that the stock market can drop 50% at any time. So, the proper answer for (B) should be I can lose 100%. If the stock market is returning 10% per year, then, (A) needs to be significantly higher to justify the higher risk of (B).

2) Does it matter? If you are gambling on the stock in order to gain an additional 1% of your portfolio, you have a gambling problem. You should buy a lottery ticket instead.

KlangFool
You have a certain a way of evaluating the risk/return which is faulty. If I have a million dollar portfolio and choose to invest 10K in a company with a long history of excellent returns that is down 40 pct because of chaos in the total market and economy, maybe the thought of making 3 or 4000 on a 10K investment is appealing to me. I do not need it to make some ridiculous astronomical return to be worth my while.
You see this one way and one way only which is 5 pct of your portfolio has to return the same total amount as 95 pct of your portfolio to be worth your time. I am EXTREMELY confident that very few people would agree with that view. If that is your belief ,more power to you, that does not mean it is logical or rational to anyone else. Gambling problem? So I guess a list of the greatest investors in history are all gamblers and irrational? Investing in the greatest companies on earth when they are down is horrible and pure gambling.
Like I said your views are respected, but I honestly think you have extreme tunnel vision on this one.
It is one thing to say you do not believe in buying individual stocks. It is another to add the ridiculous math trying to justify your view,which is still ok for your own portfolio, until you call everyone who disagrees Irrational gamblers.
hoops777,

<< I am EXTREMELY confident that very few people would agree with that view. >>

And, that is a good validation of my view.

<<So I guess a list of the greatest investors in history are all gamblers and irrational? >>

And, how do that matter to you and me? I am rational enough to know that I am not one of them. Hence, imitating their behavior is a sure way to lose money.

KlangFool
Well you said it. Your opinion on this is so extreme at every level and I say this respectfully, so nonsensical, that the discussion has nowhere to go. Good luck. I am curious about a philosophy that says I am not an expert so why try to imitate the behavior of an expert. I wonder how you developed the skills you possess in your life if you did not learn from experts and very successful people. Or when it comes to investing do we throw everything in life that applies to learning in every other field out the window? You of course learned about investing from such people, but like everything else you choose who you listen too. So maybe your way is not absolute and everyone else is not irrational and gambling stupidly because they choose to see it differently.
Peace.
I think what KlangFool is saying is that why waste your time buying Dis Stock for 2% of portfolio when you could buy Dis leaps with 2% of portfolio that way you can have 1000% return, All kidding aside DIS probably has better chance at a triple than XOM

Iridium
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Re: Is Disney the most tempting value stock?

Post by Iridium » Wed May 06, 2020 2:28 am

nigel_ht wrote:
Tue May 05, 2020 1:46 pm
Iridium wrote:
Mon May 04, 2020 6:46 pm
For the last decade, Pixar has reliably made hits but no longer makes franchises (5 of the first 6 original films Pixar made have gotten sequels - not a single film since has gotten a sequel).
Actually Pixar doing sequels is something they originally didn't want to do much of. They had a stack of stories they wanted to tell and not rehash old ground.

Granted franchises are lucrative but if all you're doing is Cars 9 and Toy Story 14 you know you've run out of creative energy.
4 out of their last 6 movies have been sequels. I seem to recall reading somewhere that they plan on doing half sequels and half original. Which they more or less have been doing over the last decade or so. I have absolutely no problem with that model. What concerns me is that the sequels are all to movies created before Disney bought Pixar. What happens once Pixar starts wearing through its franchises? Toy Story is up to its 4th movie, though all have been strong critically and at the box office. On the other hand, critics haven't been in love with either Cars sequel, and the last Cars movie brought in half of a typical Pixar movie. Do Ratatouille, WALL-E, Up, or Brave have what it takes to become a franchise, if/when Cars takes a dive or the possibilities in the Toy Story universe are exhausted?
nigel_ht wrote:
Tue May 05, 2020 7:40 pm
Second, it is really unlikely for DIS to go to zero even down 90% earnings. If the market is irrational enough for DIS to hit $50 tomorrow I'll put in $50K. That's being greedy when everyone else is fearful. The odds of losing 100% is essentially zero while the odds of DIS hitting $150 again in the future is reasonable.
It isn't central to your point, but note that Disney earnings are down 90% just two weeks into the US' shutdown (out of roughly 13 weeks in the quarter). They are certainly not going to be profitable next quarter.

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Forester
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Re: Is Disney the most tempting value stock?

Post by Forester » Wed May 06, 2020 4:52 am

"EV/EBIT = 20.9
EV/Sales = 3.19

In 2012, it traded at an EV/EBIT multiple of 11.5 and EV/Sales of 2.4. At the end of ‘08, it was 7.2 and 1.4.

Call me crazy, but if unemployment is 20%, I should be able to pick up a quality stock like Disney for a bargain price."

@ValueStockGeek https://twitter.com/ValueStockGeek/stat ... 66757?s=20

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Re: Is Disney the most tempting value stock?

Post by TomatoTomahto » Wed May 06, 2020 8:01 am

whereskyle wrote:
Tue May 05, 2020 4:47 pm
Well, earnings are out, futures show Disney under $100, and I am...

less than convinced Disney is a no-brainer value buy. I'll probably be sticking to VTSAX and VT with my purchases tomorrow.
Yeah. I don’t buy individual stocks anyway, and maybe it’s because I don’t have young children any more, but:
- I didn’t even bother signing up for the free Disney streaming. The vaunted IP is, to me, meh meh meh
- my one trip to a Disney park was enough for me, thanks
- you couldn’t get me on an overpriced Disney cruise with a shotgun
- ESPN and its fees is one of the major reasons I cut cable and went all streaming

It’s too bad, IMO, that Disney is part of the haystack, but I don’t feel strongly enough to short it, which is not something I do anyway. .
-
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Is Disney the most tempting value stock?

Post by KlangFool » Wed May 06, 2020 8:06 am

hoops777 wrote:
Tue May 05, 2020 8:33 pm


Well you said it. Your opinion on this is so extreme at every level and I say this respectfully, so nonsensical, that the discussion has nowhere to go. Good luck. I am curious about a philosophy that says I am not an expert so why try to imitate the behavior of an expert. I wonder how you developed the skills you possess in your life if you did not learn from experts and very successful people. Or when it comes to investing do we throw everything in life that applies to learning in every other field out the window? You of course learned about investing from such people, but like everything else you choose who you listen too. So maybe your way is not absolute and everyone else is not irrational and gambling stupidly because they choose to see it differently.
Peace.
hoops777,

<< I wonder how you developed the skills you possess in your life if you did not learn from experts and very successful people. >>

1) I had spent 30+ years of training and learning to be an expert in my subject area. I am smart enough to know I have neither the time or capability to be the next Warren Buffett.

2) If you like and believe in Warren Buffett, why imitate Warren Buffett? You can hire him to invest for you by buying BRK.A or BRK.B.

Which way is more rational and logical?

A) Imitating Warren Buffett ( 1 in X billion people) aka the greatest investor and hope to strike the lottery. Aka, 1 in X billion to be as good as Warren Buffett.

B) Hire Warren Buffett by buying BRK.A or BRK.B

(A) or (B)? How could (A) be a rational answer?

KlangFool

randomguy
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Re: Is Disney the most tempting value stock?

Post by randomguy » Wed May 06, 2020 9:28 am

nigel_ht wrote:
Tue May 05, 2020 4:13 pm
KlangFool wrote:
Tue May 05, 2020 3:28 pm
nigel_ht wrote:
Tue May 05, 2020 2:07 pm
KlangFool wrote:
Mon May 04, 2020 6:41 pm
1130Super wrote:
Mon May 04, 2020 6:16 pm

Why does it have to go up 10X? I’d be happy at a triple in 5 years
1130Super,

Why do you think it is worth your time and effort if it triples? Show me your calculation.

KlangFool
$50K x 3 = $150K = $100K - 15% LTCG = $85K profit

That's quite a bit of ROI for the 15 minutes spent going "Holy cow, DIS is selling at $50 a share".
nigel_ht,

If 85K over 3 years is significant to you, then 50K is a significant portion of your portfolio. Why would you want to bet 50K (a significant portion of your portfolio) on an individual stock with significantly higher risk?

KlangFool
DIS @ $50 is very little risk. Just like $8 for CCL was low risk when it was down 70% and the market was down only 30%. Can CCL or DIS go under? Yep. But it’s only a small part of the portfolio.

You’re making bogus assumptions. $85K is a nice win for the effort involved even if $50K isn’t a large part of my portfolio. It’s not like there are that many options that will have a higher ROI on $50K for the same level of risk.
And it going to 25 would be a nice loss for the effort involved? There is a crap load of risk in disney. Each of the last star wars movies has done worse than the ones before it (i.e. a 1 billion dollar movie is nice. But the 2 billion the first 1 first in the trilogy made is better). Marvel is replacing a good chunk of their cast. Will the magic last with the new shows? The parts could be a drain on the balance sheet for 3-4 years. Is Disney Plus going to be additive or cannabilistic (i.e. I didn't buy Rise of Skywalker cause I got it for free. Same thing with a half dozen Pixar movies I watched this year)? How many people will renew after year 1?

You can does this with any stock with losses. You can make up a story about how it will soon overcome and bounce back. You can make up a story about how the new reality is just going to get worse. The person who guesses right makes the money.

Robot Monster
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Re: Is Disney the most tempting value stock?

Post by Robot Monster » Wed May 06, 2020 9:32 am

KlangFool wrote:
Tue May 05, 2020 7:55 pm
So, what is your worst-case number? If the stock market can drop 50%, the DIS stock can definitely drop much more than that.
Could we extend this as a rule of thumb to when betting on any individual stock, that the worst case drop for the market as a whole is 50%, but for an individual stock the worst case drop potential is much higher? I'm guessing this is based on historical observation, that the market has never dropped more than 50% and that certain individual stocks of course have?
"I HAVE THE POWER!!!" ~ He-Man

Robot Monster
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Re: Is Disney the most tempting value stock?

Post by Robot Monster » Wed May 06, 2020 9:39 am

randomguy wrote:
Wed May 06, 2020 9:28 am
You can does this with any stock with losses. You can make up a story about how it will soon overcome and bounce back. You can make up a story about how the new reality is just going to get worse. The person who guesses right makes the money.
What's unclear to me is how much of a positive story, or negative story, is already baked into the price, not just this stock but any individual stock.
"I HAVE THE POWER!!!" ~ He-Man

Mrvtmn
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Re: Is Disney the most tempting value stock?

Post by Mrvtmn » Wed May 06, 2020 10:09 am

DIS up around 2% today. Nobody knows nuthin' LOL

I bought a little bit a few weeks ago at 101.6 but I plan to buy and hold for the long haul and most of my holdings are in VOO.

The big gamble here is the profitability of DIS+.

KlangFool
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Re: Is Disney the most tempting value stock?

Post by KlangFool » Wed May 06, 2020 10:13 am

Robot Monster wrote:
Wed May 06, 2020 9:32 am
KlangFool wrote:
Tue May 05, 2020 7:55 pm
So, what is your worst-case number? If the stock market can drop 50%, the DIS stock can definitely drop much more than that.
Could we extend this as a rule of thumb to when betting on any individual stock, that the worst case drop for the market as a whole is 50%, but for an individual stock the worst case drop potential is much higher? I'm guessing this is based on historical observation, that the market has never dropped more than 50% and that certain individual stocks of course have?
Worst case drop should be 100%.

KlangFool

BV3273
Posts: 557
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Re: Is Disney the most tempting value stock?

Post by BV3273 » Wed May 06, 2020 10:30 am

I’ve had some good chuckles reading this post.

$50 Disney stock is like a new Porsche selling for $35,000.

Carry on though.

index2max
Posts: 286
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Re: Is Disney the most tempting value stock?

Post by index2max » Wed May 06, 2020 10:58 am

hoops777 wrote:
Tue May 05, 2020 12:50 pm
index2max wrote:
Tue May 05, 2020 12:19 pm
Aside from theme parks and made-in-China merchandise that they own the trademarks to (Mickey Mouse, Star Wars etc.), what value does Disney offer?

Anyone can bittorrent their movies for free nowadays once someone rips a dvd or blu-ray disk and uploads it online.

Better to buy stocks in a company manufacturing useful things, which are protected by patents or trade secrets like 3M IMO.

Of course, no matter how well a big company is managed today, there's always the risk that a guy like Jack Welch will come around and slowly destroy a good company within 20 years, like GE.

This is what's nice about index funds. No need to worry about specific companies.

Of course, it's fun to invest in a few select companies if you have some extra funny money to throw around.
With all due respect you are truly not understanding what Disney is,what they own and how popular and meaningful it is to millions and millions and millions of people. To you it is just meaningless stuff kind of like what the NBA,NFL and MBL are to people who hate sports.
Oh yeah you reminded me about ESPN too. They were so profitable back in 2011, but unfortunately 70% of their revenue came from cable subscribers fees. Read ESPN demands $8 pee basic cable subscription. With so many streaming options available (or bittorrent heh heh), people gave been dropping cable and satellite tv like crazy. ESPN is probably going bankrupt at this rate. Far fall from grace compared to mid-2000s

The rest of ESPN, revenue is advertising. When live sports aren’t playing, no one is watching their analysts talk for hours about last night’s game. I can do that online for free on YouTube.

Like most people, I grew up watching Disney movies in my childhood. Lots of sentimental value there, but we’re talking about market value here... This is why I am poo-pooing their stock. I could be wrong in the long-run, but Hollywood has not adapted their business model to deal with filesharing (e.g. put more product placement in their movies).

hoops777
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Re: Is Disney the most tempting value stock?

Post by hoops777 » Wed May 06, 2020 11:26 am

KlangFool wrote:
Wed May 06, 2020 8:06 am
hoops777 wrote:
Tue May 05, 2020 8:33 pm


Well you said it. Your opinion on this is so extreme at every level and I say this respectfully, so nonsensical, that the discussion has nowhere to go. Good luck. I am curious about a philosophy that says I am not an expert so why try to imitate the behavior of an expert. I wonder how you developed the skills you possess in your life if you did not learn from experts and very successful people. Or when it comes to investing do we throw everything in life that applies to learning in every other field out the window? You of course learned about investing from such people, but like everything else you choose who you listen too. So maybe your way is not absolute and everyone else is not irrational and gambling stupidly because they choose to see it differently.
Peace.
hoops777,

<< I wonder how you developed the skills you possess in your life if you did not learn from experts and very successful people. >>

1) I had spent 30+ years of training and learning to be an expert in my subject area. I am smart enough to know I have neither the time or capability to be the next Warren Buffett.

2) If you like and believe in Warren Buffett, why imitate Warren Buffett? You can hire him to invest for you by buying BRK.A or BRK.B.

Which way is more rational and logical?

A) Imitating Warren Buffett ( 1 in X billion people) aka the greatest investor and hope to strike the lottery. Aka, 1 in X billion to be as good as Warren Buffett.

B) Hire Warren Buffett by buying BRK.A or BRK.B

(A) or (B)? How could (A) be a rational answer?

KlangFool
My point is that you learn from the best not that you try to become them. I can study teaching videos from a great athlete to improve my skills. I am not trying to become him. But as usual you twist everything to your belief. My point is many,actually the majority of the greatest investors in the world bought individual stocks. My point is they are/were not irrational gamblers. My point is I have zero problem or any negative thing to say about anyone who simply believes one should not buy individual stocks.I actually agree buying index funds is the best option for most. My problem stems from your labeling of people and your nonsensical math that you use as a personal firewall to make sure you never buy an individual stock. It is great for you because that is what you need.Please do not expect others to have your belief of 10x to 30x and label them as irrational gamblers if they disagree with your extreme view.
K.I.S.S........so easy to say so difficult to do.

hoops777
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Re: Is Disney the most tempting value stock?

Post by hoops777 » Wed May 06, 2020 11:35 am

index2max wrote:
Wed May 06, 2020 10:58 am
hoops777 wrote:
Tue May 05, 2020 12:50 pm
index2max wrote:
Tue May 05, 2020 12:19 pm
Aside from theme parks and made-in-China merchandise that they own the trademarks to (Mickey Mouse, Star Wars etc.), what value does Disney offer?

Anyone can bittorrent their movies for free nowadays once someone rips a dvd or blu-ray disk and uploads it online.

Better to buy stocks in a company manufacturing useful things, which are protected by patents or trade secrets like 3M IMO.

Of course, no matter how well a big company is managed today, there's always the risk that a guy like Jack Welch will come around and slowly destroy a good company within 20 years, like GE.

This is what's nice about index funds. No need to worry about specific companies.

Of course, it's fun to invest in a few select companies if you have some extra funny money to throw around.
With all due respect you are truly not understanding what Disney is,what they own and how popular and meaningful it is to millions and millions and millions of people. To you it is just meaningless stuff kind of like what the NBA,NFL and MBL are to people who hate sports.
Oh yeah you reminded me about ESPN too. They were so profitable back in 2011, but unfortunately 70% of their revenue came from cable subscribers fees. Read ESPN demands $8 pee basic cable subscription. With so many streaming options available (or bittorrent heh heh), people gave been dropping cable and satellite tv like crazy. ESPN is probably going bankrupt at this rate. Far fall from grace compared to mid-2000s

The rest of ESPN, revenue is advertising. When live sports aren’t playing, no one is watching their analysts talk for hours about last night’s game. I can do that online for free on YouTube.

Like most people, I grew up watching Disney movies in my childhood. Lots of sentimental value there, but we’re talking about market value here... This is why I am poo-pooing their stock. I could be wrong in the long-run, but Hollywood has not adapted their business model to deal with filesharing (e.g. put more product placement in their movies).
I do not own Disney stock and I was simply pointing out that it is an extremely popular company with a lot of emotional connection that some just do not understand.I have no idea about the price but my very amateur analysis would say wait and see if it gets back to 80 and below if someone wants to buy a little. That advice is worth about as much as a free ticket to Disneyland Anaheim this weekend only. :D
K.I.S.S........so easy to say so difficult to do.

KlangFool
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Re: Is Disney the most tempting value stock?

Post by KlangFool » Wed May 06, 2020 11:48 am

hoops777 wrote:
Wed May 06, 2020 11:26 am

My point is that you learn from the best not that you try to become them. I can study teaching videos from a great athlete to improve my skills. I am not trying to become him. But as usual you twist everything to your belief. My point is many,actually the majority of the greatest investors in the world bought individual stocks. My point is they are/were not irrational gamblers. My point is I have zero problem or any negative thing to say about anyone who simply believes one should not buy individual stocks.I actually agree buying index funds is the best option for most. My problem stems from your labeling of people and your nonsensical math that you use as a personal firewall to make sure you never buy an individual stock. It is great for you because that is what you need.Please do not expect others to have your belief of 10x to 30x and label them as irrational gamblers if they disagree with your extreme view.
hoops777,

<<My point is many,actually the majority of the greatest investors in the world bought individual stocks. My point is they are/were not irrational gamblers. >>

But, you and I are not one of them. So, how does that validate anything?

<<My problem stems from your labeling of people and your nonsensical math that you use as a personal firewall to make sure you never buy an individual stock.>>

That statement is actually not true. I am buying a stock now because I believe that it can return 10X to 30X.

<<Please do not expect others to have your belief of 10x to 30x and label them as irrational gamblers if they disagree with your extreme view.>>

Show me the math and calculation on how does it makes any sense?

It is very simple.

A) The stock market can drop 50% and the stock market return about X% per year.

B) Individual stock can drop 100%. So, the risk is significantly higher than the stock market. So, the return needs to be a lot higher.

C) Because of the higher risk aka losing 10%, the person should not invest more than 5% of its portfolio into individual stocks.

D) That translates into about 1% of the portfolio into one stock.

E) In order for that 1% to generate return significantly enough to matter, it needs to return 10X to 30X.

KlangFool

inbox788
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Re: Is Disney the most tempting value stock?

Post by inbox788 » Wed May 06, 2020 11:51 am

nigel_ht wrote:
Tue May 05, 2020 7:40 pm
It absolutely is a bogus assumption at every level...first, a "nice win" implies nothing about the size or importance of that win. Just that it was nice to get. I beat my buddy in a game of pool for $5 is a "nice win" not for the dollar amount but because I won. Making $100K profit (before taxes) off a $50K investment is a nice win whatever the size of your portfolio.

Second, it is really unlikely for DIS to go to zero even down 90% earnings. If the market is irrational enough for DIS to hit $50 tomorrow I'll put in $50K. That's being greedy when everyone else is fearful. The odds of losing 100% is essentially zero while the odds of DIS hitting $150 again in the future is reasonable.

Unfortunately it's really unlikely for DIS to drop to $50 tomorrow. On the other hand NCLH's statement was hardly surprising and the price dropped 20% so you never know. Most likely DIS drops into a range where it's only slightly a good deal.
If you bought DIS at $50 and sold at $100 making 100% in a short time, congratulations! In any case, whether you bought DIS at $50 or $150 or take cash in your pocket and buy it today at $100 and are holding on to it, is it still a tempting stock?

It could get back to $50, and it's not just an irrational market that could do that (IMO Carnival and Boston Marriot concerns are quite rational). And while I don't think it will hit either 50 or 150 anytime soon, if forced to choose, I see the 50 as more likely in the immediate near term, and if it happens, it might present an opportunity for those with the ability and willing to take a risk. [For the most part all of my money is already on the table, so I would have to move some around, and I've come to find that cumbersome.]

It could (and IMO will likely hit $150 again eventually), but the question is when and under what conditions? Six months ago, everything was quite rosy and DIS made all time highs of $150, but I'm afraid it will be a while before we get back to that situation. When will Disney, Marvel and Star Wars blockbusters fill theaters again? Disney cruises sell out? Hotels and theme parks fill up? NFL, NBA, NHL, and MLB games fully resume on ESPN? It took all that and a good economy of Nov 2019 for DIS to reach 150, and I don't think we'll be there in a year or two, so my estimate is maybe in 3-5 years. The one upside is Disney Plus which seems to be growing faster than expected, but I don't think it's a big enough part of DIS yet to make a big difference in the near term. Others may disagree, which makes the market.

https://seekingalpha.com/article/434355 ... ong-upside

Anyway, I can find other more tempting bets with different risks and return profiles that I would choose over this one, but it's easiest for me not to bother with any of it.
Last edited by inbox788 on Wed May 06, 2020 11:56 am, edited 1 time in total.

randomguy
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Re: Is Disney the most tempting value stock?

Post by randomguy » Wed May 06, 2020 11:54 am

Robot Monster wrote:
Wed May 06, 2020 9:39 am
randomguy wrote:
Wed May 06, 2020 9:28 am
You can does this with any stock with losses. You can make up a story about how it will soon overcome and bounce back. You can make up a story about how the new reality is just going to get worse. The person who guesses right makes the money.
What's unclear to me is how much of a positive story, or negative story, is already baked into the price, not just this stock but any individual stock.
Enough to make the FMV of disney 100 bucks not 140 or 75:) Some of the analysts give you some of their assumptions about how they came up with a price but you tend not to get the full story. You don't see many analysts ever predicting stocks will be 50% lower in 12 months.

It is always tempting to bull a company that is 30%+ off previous year peaks. After all it that was the FMV and we will bounce back their quickly right? It often works out that way when the markets overreact to small hickups. Sometimes things keep dropping.

DemySD
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Re: Is Disney the most tempting value stock?

Post by DemySD » Wed May 06, 2020 12:02 pm

Elysium wrote:
Mon May 04, 2020 11:34 am
Never liked Disney, felt it was over-hyped, overcrowded, bad food, long lines, poor treatment of employees and environment.
I must interject. This is objectively wrong. And if you're complaining about the random fast service burgers you got that's like saying New York has bad food because the McDonald's was disappointing. That whole resort is crawling with great restaurants and more than a few spectacular ones.

inbox788
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Re: Is Disney the most tempting value stock?

Post by inbox788 » Wed May 06, 2020 12:03 pm

A spec of good news for Disney fans, most likely responsible for today's huge move in DIS stock price.

Shanghai Disney Resort Prepares for Reopening in China
May 5, 2020
https://www.youtube.com/watch?v=s4tvE5l5mdw

nigel_ht
Posts: 890
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Re: Is Disney the most tempting value stock?

Post by nigel_ht » Wed May 06, 2020 12:48 pm

Robot Monster wrote:
Wed May 06, 2020 9:32 am
KlangFool wrote:
Tue May 05, 2020 7:55 pm
So, what is your worst-case number? If the stock market can drop 50%, the DIS stock can definitely drop much more than that.
Could we extend this as a rule of thumb to when betting on any individual stock, that the worst case drop for the market as a whole is 50%, but for an individual stock the worst case drop potential is much higher? I'm guessing this is based on historical observation, that the market has never dropped more than 50% and that certain individual stocks of course have?
The worst bear market was 1929 and down 83% (S&P 500). Did not regain previous peak until 1954.

https://www.fidelity.com/viewpoints/mar ... -explained

nigel_ht
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Re: Is Disney the most tempting value stock?

Post by nigel_ht » Wed May 06, 2020 1:03 pm

KlangFool wrote:
Wed May 06, 2020 8:06 am


B) Hire Warren Buffett by buying BRK.A or BRK.B

(A) or (B)? How could (A) be a rational answer?

KlangFool
Folks like to believe that Buffett passing away is baked into BRK pricing but I suspect it's not. Hence BRK isn't a great buy even if I agree with his strategies and that he has executed well in the past. Ajit Jain and Grab Able seem good but it would have been better if someone had taken over already and had a couple wins while Buffett was still around. There's a question of whether both would be advanced or just one and the other decides to leave, etc. And Jain is 68. Abel is at least 57.

There was a bit of consternation when Jobs passed and that was with Tim Cook running the show for years already.

nigel_ht
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Re: Is Disney the most tempting value stock?

Post by nigel_ht » Wed May 06, 2020 1:15 pm

inbox788 wrote:
Wed May 06, 2020 11:51 am
If you bought DIS at $50 and sold at $100 making 100% in a short time, congratulations! In any case, whether you bought DIS at $50 or $150 or take cash in your pocket and buy it today at $100 and are holding on to it, is it still a tempting stock?
Klangfool is arguing that a 3X return is a bad deal and asked how Disney could ever be a good deal. Buying Disney at $50 and it going to $150 is a hypothetical. Disney at $100 isn't a great deal, no.

inbox788
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Re: Is Disney the most tempting value stock?

Post by inbox788 » Wed May 06, 2020 1:41 pm

nigel_ht wrote:
Wed May 06, 2020 1:15 pm
inbox788 wrote:
Wed May 06, 2020 11:51 am
If you bought DIS at $50 and sold at $100 making 100% in a short time, congratulations! In any case, whether you bought DIS at $50 or $150 or take cash in your pocket and buy it today at $100 and are holding on to it, is it still a tempting stock?
Klangfool is arguing that a 3X return is a bad deal and asked how Disney could ever be a good deal. Buying Disney at $50 and it going to $150 is a hypothetical. Disney at $100 isn't a great deal, no.
When talking about "risk adjusted", it helps to define the investment or trade timeframe and forgetting what happened in the past. A 3X return over 3 months is superb. Over 3 years, nice. Over 30 years, quite poor. I suspect a lot of pears are being compared to oranges here.

Anyway, I'm realizing even the $50 is hypothetical, since the lowest it's been recently is 85 in late March. FWIW, I just compared YTD performance for DIS to HON and XLF and they're very similar. SP500 beat them all, so some of the components like AMZN or PG or JNJ held up well and recovered nicely. I was looking for (but unable to find) ones that tanked more than 30-40%, same or worse than DIS, but made a bigger comeback -- the ones that are more likely to be characterized as "irrational panic selling" (in hindsight).

My take is that DIS performance in context was and is mostly rational, and I'm trying to formulate what criteria one would use (especially in the heat of battle moments) to make decisions about "irrational" pricing. IMO price or discount alone isn't sufficient.

nigel_ht
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Re: Is Disney the most tempting value stock?

Post by nigel_ht » Wed May 06, 2020 1:45 pm

KlangFool wrote:
Wed May 06, 2020 11:48 am
hoops777 wrote:
Wed May 06, 2020 11:26 am

My point is that you learn from the best not that you try to become them. I can study teaching videos from a great athlete to improve my skills. I am not trying to become him. But as usual you twist everything to your belief. My point is many,actually the majority of the greatest investors in the world bought individual stocks. My point is they are/were not irrational gamblers. My point is I have zero problem or any negative thing to say about anyone who simply believes one should not buy individual stocks.I actually agree buying index funds is the best option for most. My problem stems from your labeling of people and your nonsensical math that you use as a personal firewall to make sure you never buy an individual stock. It is great for you because that is what you need.Please do not expect others to have your belief of 10x to 30x and label them as irrational gamblers if they disagree with your extreme view.
hoops777,

<<My point is many,actually the majority of the greatest investors in the world bought individual stocks. My point is they are/were not irrational gamblers. >>

But, you and I are not one of them. So, how does that validate anything?

<<My problem stems from your labeling of people and your nonsensical math that you use as a personal firewall to make sure you never buy an individual stock.>>

That statement is actually not true. I am buying a stock now because I believe that it can return 10X to 30X.

<<Please do not expect others to have your belief of 10x to 30x and label them as irrational gamblers if they disagree with your extreme view.>>

Show me the math and calculation on how does it makes any sense?

It is very simple.

A) The stock market can drop 50% and the stock market return about X% per year.

B) Individual stock can drop 100%. So, the risk is significantly higher than the stock market. So, the return needs to be a lot higher.

C) Because of the higher risk aka losing 10%, the person should not invest more than 5% of its portfolio into individual stocks.

D) That translates into about 1% of the portfolio into one stock.

E) In order for that 1% to generate return significantly enough to matter, it needs to return 10X to 30X.

KlangFool
A) The stock market can drop 83% but the probability is low and let's call it 10% returns on average.

B) Individual stocks can drop 100% but for stocks like DIS the probability is low. The risk for any given stock is not necessarily significantly higher than the total market especially if it has been oversold. So the returns should higher but not necessarily 1000%.

C) Folks can invest 100% of their total equity portfolio in individual stocks so long as it's diversified. It may be annoying to hold and manage a large number of stocks which is why indexing is better. My mom essentially held the DJIA as individual stocks as her core with a smattering of S&P500 stocks. Odds of that portfolio dropping significantly harder than the total market is remote.

D) That translates into no more than say 1-3% in any given stock unless you are cap weighting or something.

E) In order for that individual stock to generate returns significantly enough to matter it should have an average return around 10% like the total market. 7.7% for the DJIA stocks is in the ballpark given the last 5 years it beat the S&P 500.

Any 10X or 30X stock is likely hugely speculative and has a far higher risk of going to $0.

randomguy
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Re: Is Disney the most tempting value stock?

Post by randomguy » Wed May 06, 2020 1:49 pm

nigel_ht wrote:
Wed May 06, 2020 12:48 pm
Robot Monster wrote:
Wed May 06, 2020 9:32 am
KlangFool wrote:
Tue May 05, 2020 7:55 pm
So, what is your worst-case number? If the stock market can drop 50%, the DIS stock can definitely drop much more than that.
Could we extend this as a rule of thumb to when betting on any individual stock, that the worst case drop for the market as a whole is 50%, but for an individual stock the worst case drop potential is much higher? I'm guessing this is based on historical observation, that the market has never dropped more than 50% and that certain individual stocks of course have?
The worst bear market was 1929 and down 83% (S&P 500). Did not regain previous peak until 1954.

https://www.fidelity.com/viewpoints/mar ... -explained
I reinvested my dividends , by the end of 1936 I was up in real terms. Do. you care more about the S&P 500 number or the amount of money you are making?

nigel_ht
Posts: 890
Joined: Tue Jan 01, 2019 10:14 am

Re: Is Disney the most tempting value stock?

Post by nigel_ht » Wed May 06, 2020 1:52 pm

inbox788 wrote:
Wed May 06, 2020 1:41 pm
nigel_ht wrote:
Wed May 06, 2020 1:15 pm
inbox788 wrote:
Wed May 06, 2020 11:51 am
If you bought DIS at $50 and sold at $100 making 100% in a short time, congratulations! In any case, whether you bought DIS at $50 or $150 or take cash in your pocket and buy it today at $100 and are holding on to it, is it still a tempting stock?
Klangfool is arguing that a 3X return is a bad deal and asked how Disney could ever be a good deal. Buying Disney at $50 and it going to $150 is a hypothetical. Disney at $100 isn't a great deal, no.
When talking about "risk adjusted", it helps to define the investment or trade timeframe and forgetting what happened in the past. A 3X return over 3 months is superb. Over 3 years, nice. Over 30 years, quite poor. I suspect a lot of pears are being compared to oranges here.

Anyway, I'm realizing even the $50 is hypothetical, since the lowest it's been recently is 85 in late March. FWIW, I just compared YTD performance for DIS to HON and XLF and they're very similar. SP500 beat them all, so some of the components like AMZN or PG or JNJ held up well and recovered nicely. I was looking for (but unable to find) ones that tanked more than 30-40%, same or worse than DIS, but made a bigger comeback -- the ones that are more likely to be characterized as "irrational panic selling" (in hindsight).

My take is that DIS performance in context was and is mostly rational, and I'm trying to formulate what criteria one would use (especially in the heat of battle moments) to make decisions about "irrational" pricing. IMO price or discount alone isn't sufficient.
Sorry, the timeframe was 3 years. Funny..."nice" is exactly how I described it.

The irrational panic selling was limited to CCL and airlines. CCL was down around 70-80%. The risk for CCL to go bankrupt is much higher than DIS but more likely NCLH would first and that would make CCL's position better when they could recover. On the other hand they could all go under like retail stores but the major retail chains have been under pressure for a while now while the cruise industry was doing pretty well.

nigel_ht
Posts: 890
Joined: Tue Jan 01, 2019 10:14 am

Re: Is Disney the most tempting value stock?

Post by nigel_ht » Wed May 06, 2020 1:53 pm

randomguy wrote:
Wed May 06, 2020 1:49 pm
nigel_ht wrote:
Wed May 06, 2020 12:48 pm
Robot Monster wrote:
Wed May 06, 2020 9:32 am
KlangFool wrote:
Tue May 05, 2020 7:55 pm
So, what is your worst-case number? If the stock market can drop 50%, the DIS stock can definitely drop much more than that.
Could we extend this as a rule of thumb to when betting on any individual stock, that the worst case drop for the market as a whole is 50%, but for an individual stock the worst case drop potential is much higher? I'm guessing this is based on historical observation, that the market has never dropped more than 50% and that certain individual stocks of course have?
The worst bear market was 1929 and down 83% (S&P 500). Did not regain previous peak until 1954.

https://www.fidelity.com/viewpoints/mar ... -explained
I reinvested my dividends , by the end of 1936 I was up in real terms. Do. you care more about the S&P 500 number or the amount of money you are making?
Goalposts moved. 10 yard penalty. The question was worst case drop for the market as a whole. It is more than 50%.

TigerNest
Posts: 353
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Re: Is Disney the most tempting value stock?

Post by TigerNest » Wed May 06, 2020 1:59 pm

Movie theaters, Theme Parks, Sports (ESPN), Cruises, merchandise sales....

It's a well-run company with good IP, but they seem much more exposed to covid-impacted industries than most large companies, and some of those segments may take a while to recover.

It's also only down ~30% YTD, back to 2018 price levels.

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JMacDonald
Posts: 2316
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Re: Is Disney the most tempting value stock?

Post by JMacDonald » Wed May 06, 2020 2:18 pm

Disney will certainly become a value stock at this rate:

"Disney theme parks take a $1-billion hit amid coronavirus closures"

https://www.latimes.com/entertainment-a ... urt-so-far
Disney estimated that the business missed out on $1 billion in operating income because of the theme park closures during the quarter, which ended March 28. About half of the $1-billion hit was from the company’s U.S. theme parks, which were closed for just two weeks during the period. International parks and cruise ships accounted for the rest, Disney said.
Best Wishes, | Joe

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