The Useless Tree and Value Investing
Posted 27th November 2013 at 07:37 PM by Jonwebb
Quote:
~ The Useless Tree ~
Hui Tzu said to Chuang, “I have a big tree, the kind they call a “stinktree.” The trunk is so distorted, so full of knots, no one can get a straight plank out of it. The branches are so crooked you cannot cut them up in any way that makes sense.”
“There it stands beside the road. No carpenter will even look at it. Such is your teaching – big and useless.”
Chuang Tzu replied, “Have you ever watched the wildcat crouching, watching his prey. The prey leaps this way, and that way, high and low, and at last lands in the trap. And have you seen the Yak? Great as a thundercloud, he stands in his might. Big? Sure, but he can’t catch mice!”
“So for your big tree, no use? Then plant it in the wasteland, in emptiness. Walk idly around it, rest under its shadow. No axe or bill prepares its end. No one will ever cut it down.”
“Useless? You should worry!”
Hui Tzu said to Chuang, “I have a big tree, the kind they call a “stinktree.” The trunk is so distorted, so full of knots, no one can get a straight plank out of it. The branches are so crooked you cannot cut them up in any way that makes sense.”
“There it stands beside the road. No carpenter will even look at it. Such is your teaching – big and useless.”
Chuang Tzu replied, “Have you ever watched the wildcat crouching, watching his prey. The prey leaps this way, and that way, high and low, and at last lands in the trap. And have you seen the Yak? Great as a thundercloud, he stands in his might. Big? Sure, but he can’t catch mice!”
“So for your big tree, no use? Then plant it in the wasteland, in emptiness. Walk idly around it, rest under its shadow. No axe or bill prepares its end. No one will ever cut it down.”
“Useless? You should worry!”
If something isn't useful for a specific reason purpose does that mean it is totally useless in general?
I was have a conversation over at Jae Jun's old school value forums ( here: Old School Value Forums - Micheal Burry's Write ups)
my fellow value investor, Somrh, stated that he felt that value is defended as:
Quote:
"I contend that the value of the stock is sum of all discounted future dividends paid out. So whether or not a stock (or basket of stocks) is truly a good value would be to see what the future dividends the stock eventually paid out. That means you need to look at all of its payouts over the whole course of its life. "
for example when I invested in abbv, earlier this year, I had no intentions of holding it forever. I knew that I was gonna sell within a two year frame. Sure abbv paid a dividend since I've owned it, but my goal wasn't to collect a dividend, it was to take advantage of the inefficient price quote of the time of its spin off. Likewise I have a position in KO, I never plan on selling my shares in this company ( outside of some crazy nonsense happening) so the value of the dividend is important to me in this case.
In one example value was found in the misconception of the price, the other was found in the long term appreciation of the dividend. imo value isn't found in the static, but in what your goals are at that moment - investing is no different.
No tree is useless.
- Jonathan Webbtree
P.S. I hope everyone had a great Thanksgiving next up Christmas
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