“Buy the out-of-favor, the unpopular. Nobody can predict the market. Take that premise to heart and look to invest in dollar bills selling for 50¢. If you’re going to do your own research and investing, think value. Think downside risk. Think total return, with dividends tiding you over. We’re in a period of extraordinarily low rates—be careful with fixed income. Stay away from options. Look for securities to hold for three to five years with downside protection. ” –Article by Irving Kahn
[Question]: Do you consider the Shiller P/E market valuation method as a valid, accurate measure of the market?
[Mr. Yacktman]: We think the Shiller Cyclically Adjusted P/E formula is a fairly good long term valuation tool if you are looking to project market rates of return. We have used other, more difficult to obtain data, and achieved largely the same results as Shiller. Ultimately, however, investing for us is about valuing individual businesses. If we find good investment opportunities we are not generally concerned if with think the overall market is overpriced.
Donald Yacktman Q/A