In the 1984 rock mockumentary, Spinal Tap, bass player David St. Hubbins claims his namesake is the Saint of quality footwear. I channeled my inner Spinal Tap in this Friday afternoon, fun interview about how to look at value and growth stocks. I use Croc's and Ugg's as an example.
One firm had a line of shoes that are getting more popular with kids, but with 30% of the revenues coming from a “Sad Dad” line of poorly selling shoes, you end up with a classic value company that is selling cheap for a reason. On the other hand, we have Ugg’s, owned by Decker Outdoor, that is selling a big premium to earnings for the simple reason that everything they are doing is working right now. So, which stock to buy? Really, that isn’t the question at all - nor the point I’m really trying to make about investing.
You see, I find the hard part in portfolio construction is often when investors don't realize they have their own biases and preferences when it comes to how to invest. There is no right or wrong, there is only a consistint process and self-examination.