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No. of Recommendations: 2
https://boards.fool.com/zm-valuation-34448207.aspx?sort=post...
Bear, March 2020

ZM P/S currently <15.
Is P/S of 20 truly reasonable?

Fascinating to read old posts.

-Randy
beginning the hunt for the true new AMZNs...the ones that survive the popping bubble...not that the bubble has actually popped yet.
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No. of Recommendations: 6
beginning the hunt for the true new AMZNs...the ones that survive the popping bubble...not that the bubble has actually popped yet. -- Randy

It seems you are alluding to the dot com bubble where money losing companies disappeared back in the 1999/2000 timeframe. This bubble is not like that bubble in most respects. This time, the companies have large and rapidly rising sales and.... for the most part (at least with companies I follow).... they are making money hand over fist.

True, a lot of those companies I follow don't have "net income" per the IRS and accounting standards. Is this a problem? Not necessarily. You cite Amazon, which grew for years without "profits". How? Because Amazon.... and most of my businesses.... have positive cash flow. Or, in some cases, are rapidly moving toward positive cash flow while backed by large cash hoards from their IPO. That is facilitated by the extraordinary margins these SaaS companies achieve.

Nice businesses! And perhaps overvalued for some, although that is a subject for a more complicated discussion.

Rob
Rule Breaker Home Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
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No. of Recommendations: 15
“ That is facilitated by the extraordinary margins these SaaS companies achieve.

Nice businesses! And perhaps overvalued for some, although that is a subject for a more complicated discussion.”

Of course it’s not a discussion that’s permitted on the Saul board, although it’s one they clearly need to have. The pied piper call to chase ever higher prices to own these great companies has finally started to cause some serious pain among the late arriving bag holders, but any attempt to learn a valuation lesson from the carnage is quickly deleted by the lord or one of his apostles. It really would be a great service to everyone if they would allow the valuation conversation to happen.
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No. of Recommendations: 5
PhoolishPhilip:

It really would be a great service to everyone if they would allow the valuation conversation to happen.

It certainly would be useful but, as you can see, the rules prohibit this kind of learning on Saul's board.
I would further hazard that many investors on Saul's board, watching the rockets of 2020 would much rather get aboard than stop to listen to the curmudgeon in the corner carrying on about value.

Which brings me to my # 1 Rule of money management. No, it isn't "Don't Lose Money"--the normal first rule.

It is "Know yourself".

Investing is full of Rumsfeld's famous "And then there are the unknown unknowns". Knowing yourself well enough to know what you don't know is a good start..

Enough preaching. Just enjoying a rare sunny afternoon here in Seattle...

--s
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No. of Recommendations: 5
Interesting, FPhil, I had no idea how that board was run. My post was deleted. What a strange way to think about markets, communication and learning. It's not very "Foolish," and really quite foolish.

To the point of SaaS and market valuations (and addressing Rob): I have been in business all of my life. The holy grail is recurring income with little added expense. These companies seem to have only half of the formula. AMZN ran without profit for a long time, and I honestly don't see where exactly profit in the sale of products and delivery is (ever higher sales, ever higher sales expense). I believe it's business segments like AWS that make the company profitable.

To Rob's point that this time is different; sure DDOG and CRWD have real income when many in the dotcom bubble did not. But I see, for instance, Instacart from "underneath" (I understand and live with the same underlying costs in my own business) and that is a completely insane model. I have no idea how many of the others are built upon similar sand but I bet it's more than a few.

That said; there is a difference in the markets that is profoundly fundamental; greater participation as more average Americans sign on to their company 401ks and the growth of passive investing through ETFs. I think that the ETFs must anchor prices to a large degree on the sell side which creates greater influence on the buy side (tending to push prices up). This could be plainly seen in the Archegos situation where Hwang was piling into a few names and pushing the prices up. Also instructive is the GME trade. If everyone has "diamond hands" then the stock can either stay where it is or trade up. What I don't get is that volume has remained relatively high and there can not be volume without sellers.

Regarding Saul and his board, I read his post last night telling us all how he's still quite ok and vastly outperforming the market. He may well be, but what is never different: "everyone is s genius in a rising market" and when selling begins in earnest it all collapses in a hurry. Never forget the time element in investing. When you start and end your measurement matters.

I don't think this market is anywhere near it's bottom. If things are different, it will trade at these high valuations forever with occasional "corrections." I just hope they aren't different in this way. If that's true, then I have aged out of the market. I'm ok with that, but I'd like to have one more crack at being brave when everyone else is fearful. That's a market at least 50% lower than where we are. I started this with ZM. I like ZM. I like the story and I think it's correct in the long run. But ZM is not disconnected from the greater whole and if the market corrects 50%, ZM will drop, too, and perhaps 50%. We have to remember that if valuation models return to something normal-ish, then a company with $1 TTM earnings but sells for a P/E of 100 will drop 75%. "The Market" is an average, so some names will be much worse and some not as bad. The best companies, not so bad is where the value will be. That may well be DDOG and CRWD, but I suspect that when the tide goes out we'll see some things not quite so obvious now.

I'll leave with this: I think my very best investment idea at this moment is to buy AARK...when it's at $50 or below. I'll let Cathy do the hard work of understanding what I am too old to get.

-Randy
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No. of Recommendations: 6
AMZN ran without profit for a long time, and I honestly don't see where exactly profit in the sale of products and delivery is (ever higher sales, ever higher sales expense

There is no question that the majority of Amazon profit comes from AWS, but the retail section does pretty well, too. As you note, however, it comes with increasing capital costs and other expense, which makes earnings lumpy. Historically (ignoring the first decade when there was no profit at all) the retail end has been uneven, with periods of decent profits followed by big spending to move to the next level (2 day delivery) followed by profits followed by…

Now they spend to put in even more warehouses to get most deliveries down to one day, but at some point that spending will slow down, and presuming sales continue profitability will ramp back up, at least for a while. It should be noted that without the retail, AWS and the other ventures (Whole Foods, etc.) don’t exist, so there’s that.

Retail makes money by rental of warehouse space and services to vendors, by sales of their own higher-margin products, by advertising (sponsored listings), by Prime memberships, and more.

The retail isn’t, and probably will never be a high margin business, but I wouldn’t mind having it.
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No. of Recommendations: 9
Saul has been very adept at navigating markets for a long time, don't sell him short.

To understand the SaaS business model I recommend watching this David Skok video. It's an asset light business model that requires quite a bit of up front capital to build up a client base.

David Skok of Matrix Partners: Driving SaaS Success Using Key Metrics
https://www.youtube.com/watch?v=bCBccKfG9U0

In the long run growth beats value because, according to Einstein, compound interest is the strongest force in the universe. The difficulty with growth is the crazy volatility and if you don't have the stomach for it, don't go there.

The problem with value in this brave new world is that it does not have the tools to value growth, it relies too heavily on 1934 Graham and Dodd which was perfect for valuing bonds which are simple instruments to value, any calculator can figure out yield to maturity and the only "research" needed is to find out if the company can cover the coupons and return the capital. It's cash flow analysis. When you use DCF on growth stocks it is customary to add "risk interest" to the formula and I seriously doubt that it is anything more than a wild guess.

These are some of the reasons why value and growth don't mix.

I've given up on most of Saul's stocks because I have a hard time understanding their business models. One funny thing is that Tesla, my largest position, is BANNED from Saul's board. I'm not too sure why but it could be because it's so contentious.

Denny Schlesinger
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No. of Recommendations: 1
I think my very best investment idea at this moment is to buy AARK...when it's at $50 or below.

Curious as to which ARK fund you mean when you cite "AARK." I am not familiar with that one. Maybe you mean ARKK or ARKW?

https://ark-funds.com/our-etfs/

Pete
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No. of Recommendations: 14
I started this with ZM. I like ZM. I like the story and I think it's correct in the long run. But ZM is not disconnected from the greater whole and if the market corrects 50%, ZM will drop, too, and perhaps 50%.

ZM is an interesting case to use for looking at Saul's approach. He added it to his portfolio in May of 2019, long before the pandemic. He added and sold over time, peaking at 31% of his port at the end of September 2020, cut back drastically in December 2020, was out completely in April 2021, and has not held it since.

If you want insight into Saul's approach without the burden of following his board you can do that by reading a single message each month. Around the end of each month Saul posts a in depth review of his personal portfolio. The next one is due next weekend. He has been doing it for years, and they are all linked in the end of month summaries here: https://docs.google.com/document/d/1yF_lLGs3pI4SPcYOfIvpO5FY.... You could even go back and read what he said about ZM at each stage, including as he exited.
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No. of Recommendations: 2
Tesla, my largest position, is BANNED from Saul's board. I'm not too sure why but it could be because it's so contentious.


Denny,

TSLA is banned precisely because the numbers did not match with the story. Obviously, it's contentious, but, at the time of heavy discussion, it was losing money by a wide margin, was not showing revenue growth comparable to several other companies and, most importantly, had poor margins compared to the asset light investing model which is most popular there.

The story might have changed, however, the business is still asset heavy and does not compare well with the asset light, high high margin companies most frequented there.
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No. of Recommendations: 11
PP

Posters on Saul's Board discuss value frequently in the context of a specific company. As in "here are the numbers, FCF, margins of ZM etc etc here is my analysis of the TAM, here is why I decided to buy or not buy the stock at this time". Saul just doesn't want philosophical discussions about growth versus value that aren't attached to a specific company. And as he points out, there are plenty of places on the MF Boards to have those discussions, like here for example.

Saul always acknowledges value with his monthly posts as he explains why he gets in and out of positions. He just doesn't anchor P/E or P/S as one might when posting on Value Hounds. Take a look at how he decided to get out of Zoom for example. Or his decision to stay in Upstart when the stock crashed after UPST last earning call.

Two issues about Saul that took me about a year of following his board to appreciate:

1) he trades within an IRA, so - taxes
2) the importance of his portfolio management limiting positions to no more than 20% which means when a stock like Zoom or Upstart goes crazy, there is a check point of taking profits when the tide is in.

So if you want to have that talk about value on Sauls Board, try posting about a specific company, bring some numbers and then talk about why you are in or not it at the current stock price. Your post won't get deleted.

Or you can bang your head against the wall. It's your head.

Best

RWRocks
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No. of Recommendations: 2
https://boards.fool.com/cathie-wood-gave-the-single-worst-in...

I have learned over the years to pay attention to Naj's opinions.
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The story might have changed, however, the business is still asset heavy and does not compare well with the asset light, high high margin companies most frequented there.

The story did change. 2021 unit sales up 87% Y/Y. Earning report this week. I expect net income to double or triple. It is capital intensive and it still managed to pay down debt.

I like retail. Tesla is retail! No danger of 10% clients! Owners love their cars. And it's competing in an ossified industry weighed down by labor unions and dealer networks. 2020-21 totally changed the business outlook for Tesla from near bankruptcy to market leadership.

Denny Schlesinger
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No. of Recommendations: 5
Posters on Saul's Board discuss value frequently in the context of a specific company. As in "here are the numbers, FCF, margins of ZM etc etc here is my analysis of the TAM, here is why I decided to buy or not buy the stock at this time".

Those are metrics, not valuation in the traditional sense. One interesting example are the very high gross margins which have less meaning (value?) than gross margin in "asset heavy" business. It's an accounting quirk! As explained by David Skok, the cost of client acquisition is the major cash expenditure but it does not go into cost of good sold, instead it is an expense that goes into "Selling General and Administrative" SG&A. They should be looking at Operating Margins.

Or you can bang your head against the wall. It's your head.

There is no need for you to be rude.


So if you want to have that talk about value on Sauls Board, try posting about a specific company, bring some numbers and then talk about why you are in or not it at the current stock price. Your post won't get deleted.

I absolutely respect Saul to run his board any way he wishes. I skim the board but I very seldom post there anymore.

Denny Schlesinger
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No. of Recommendations: 0
Sorry, Pete...ARKK.
not aardvark.
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No. of Recommendations: 7
and to the "know thyself" point; Saul himself said at least once that I read, and I paraphrase: "I am not going to tell you what I do in real time." We can all see his results, after the fact. We can learn and try to emulate. Man it's a lot of work.

Ultimately, is it necessary? Nope, not for me. As I enter retirement, we have our sufficient nest egg built on a single low-average salary, but saving over time, never owning a Tesla (yet) and almost never outperforming the S&P.

Would I love to spend 25 hours a day 8 days a week playing the stock market; learning, analyzing, writing dozens of posts each day?
Nope. Absolutely not.

Good on Saul, good on him for sharing the way he does. It's a hard way to earn a living.

And may I say, it's a pleasure to see you all posting on this board. Perhaps it will become very active again very soon.

-Randy
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No. of Recommendations: 7
“Posters on Saul's Board discuss value frequently in the context of a specific company.”

Okay. And posts criticizing companies based on valuation get deleted. Of course I can’t prove it because …
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No. of Recommendations: 9
Hi PhoolishPhilip,

Okay. And posts criticizing companies based on valuation get deleted. Of course I can’t prove it because …

Sure you could, You could post it here first and then post it on Saul's board so we can see what happens. If your valuation post says XYZ is to high and the value stinks than yes it will get deleted because that is an opinion not a serious valuation. So let's see your post so we can discuss it.

Andy
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No. of Recommendations: 15
posting on Saul's board requires serious work. Have you looked at the detail in the argument about Upstart's loan delinquency rates? Is there anywhere on the free MF boards that even comes close? If the answer is yes, I'd love to know. Saul's is not for the faint of heart nor for unsophisticated beginning investors - and that warning is posted weekly.
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No. of Recommendations: 0
posting on Saul's board requires serious work. Have you looked at the detail in the argument about Upstart's loan delinquency rates? Is there anywhere on the free MF boards that even comes close? If the answer is yes, I'd love to know. Saul's is not for the faint of heart nor for unsophisticated beginning investors - and that warning is posted weekly.

You must have not been following Saul's board for very long. Some of us have been posting for years.

Andy
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No. of Recommendations: 5
I just wanted to point out that my own post valuing ServiceNow three years on from Saul calling JasonRen a "joker" for recommending it over ZOOM, has been deleted. You'll see references to my post but the post is missing.

https://boards.fool.com/service-now-now-vs-zoom-zm-34526944....

So discussions of specific stock valuations are not tolerated on the board.

The board really is a cult, and the poor newbies who have been sucked into it by the braggadocio about 1000% gains are being abused by what looks to me like a tout board. Just look at how a post on Upstart at 8:40am Jan 21 on Saul's board precipitated a 30% drop over the next two sessions. It's crazy that a post on a fool board can have that much influence on the price of a stock! It you don't think it was that post on the UPST delinquency rate that caused the drop all you have to know is that the information on which that post was based was available on December 22.

PP
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No. of Recommendations: 3
This time, the companies have large and rapidly rising sales and...

Likes of Peloton whose sales are going to to crash, to various online Gambling companies, where there is no pathway to profitability... to many SaaS/ Software names, where revenue growth is suspect and no pathway to profitability...

Lastly, not every company is Amazon.
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No. of Recommendations: 4
So if you want to have that talk about value on Sauls Board, try posting about a specific company, bring some numbers and then talk about why you are in or not it at the current stock price. Your post won't get deleted.

Your post will get deleted if your views goes against Sauls. Period. The discussion is all about cheerleading. They are not interested in critical views. Hey it is his board, he does what he likes and there is a huge following.
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No. of Recommendations: 1
Naj is smart, very opportunistic and made many smart calls. But ask him about his mistakes :) He shorted ARKK not because of Cathie wood, because it is the easiest way to short many highly valued companies as a basket and not have a single stock risk.
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No. of Recommendations: 2
I see some posts here that appear to be mischaracterizations of what Saul's board is about and how things happen there. IMO.... and no surprise.... I think the criticism comes from those who are unwilling to adapt to the board rules. That's fine, but the mischaracterization isn't helpful to anyone here who might find the board useful. For example:

Your post will get deleted if your views goes against Sauls. Period. -- Kingran

Someone posted about valuation today and indicated concern as to whether it would be acceptable because Saul has expressed reservations about the merit of valuation vs what the company does and how well it does it.

Saul pointed out that it was off topic and shouldn't be there, but stated he would not delete it and the valuation discussion continued by others.

Rob
Rule Breaker Home Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
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No. of Recommendations: 1
I see some posts here that appear to be mischaracterizations of what Saul's board is about

I am speaking from first hand experience. I pointed how he is double counting the revenue when he is talking RPO, he attempted to explain why he can double count, I said there is $X whether you count it in current period as "sales" or count what on each period, you cannot count now, and in future too. He didn't like it, he deleted my post.

Look, we all have different tools to value, some look at revenue multiple, some growth, some earnings, some free cash flow, but whatever is your choice, you cannot further "customize" the metrics and add your own inclusions and exclusions.

The very ability that he can delete posts, makes him get away with lots of BS arguments. Over the years, he became smarter, reduced some of the explanations, and just posted numbers.

We are not talking about posts on options, fixed income. These are the posts on specific companies, about specific valuation.
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No. of Recommendations: 3
Here is another post that got deleted. His one of his early idols Bert Hochfeld is a convicted felon, convicted for financial fraud, pumping stocks. When it is pointed out, he was so angry and lashed out at people, and deleted their posts and banned from his board, etc.

None of that changed the fact that Bert is a felon and he identified many growth names. You could have acknowledged his past and say I only care about his current work.
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No. of Recommendations: 2
Your post will get deleted if your views goes against Sauls. Period. -- Kingran

Someone posted about valuation today and indicated concern as to whether it would be acceptable because Saul has expressed reservations about the merit of valuation vs what the company does and how well it does it.


Alternative response I was hoping to see:

You're right Rob. I overstated my position.

*****

Too bad.

Rob
Rule Breaker Home Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
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No. of Recommendations: 9
Here is another post that got deleted. His one of his early idols Bert Hochfeld is a convicted felon, convicted for financial fraud, pumping stocks. When it is pointed out, he was so angry and lashed out at people, and deleted their posts and banned from his board, etc.

That isn't true. He told everyone that Bert Hochfeld was a convicted felon. Heck it's on everyone of Bert's posts on SeekingAlpha. You can't miss it and he tells you exactly why he was convicted. Go on SeekingAlpha and put in his name. But after the 100th discussion on Bert is a felon, well you can see why Saul might get tired of it.

Andy
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That happened later, because it became indefensible. Seeking Alpha also didn't have that disclaimer to begin with.
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When I read Bert Hochfeld on SA the disclaimer was in place. The impression I got was that Hochfeld broke the rules but there was no criminal intent. Back then I was still very active on Saul's board.

Denny Schlesinger
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No. of Recommendations: 2
That happened later, because it became indefensible. Seeking Alpha also didn't have that disclaimer to begin with.

Well Kingran I can't say whether you are right or wrong on that. But I can tell you the first time I read Bert it was on his profile. The reason why I say that is people on SeekingAlpha were attacking him for it. I was reading Bert before he was brought up on Saul's board.

I have been in argument's on Saul's board with Saul also, but never had a post removed, when I was arguing with him. Some people get there feelings hurt because they usually can't win an argument with Saul. But you have to realize that he is a Psychologist so has tools that most of us regular human beings don't, when it comes to winning an argument.

Andy
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No. of Recommendations: 1
But you have to realize that he is a Psychologist so has tools that most of us regular human beings don't

:) Sure, it also helps to have the ability to remove the posts that don't agree with you or ban the posters that are not aligned with you.

I am not saying it is wrong. He has a market view and not interested in things that are not aligned with it. He has every right to feel "this is my strength" and I want to only focus on it.

I thought his medical degree is not in "psychology". Hmmmm....
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what a strange hobby this guy has...
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No. of Recommendations: 10
what a strange hobby this guy has...

I am amazed at how intelligent he is, how much education he has, and how generous he is with his time. Their are a lot of very amazing people on these boards and I feel grateful that they have lifted me up.

Andy
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I have been in argument's on Saul's board with Saul also, but never had a post removed, when I was arguing with him. Some people get there feelings hurt because they usually can't win an argument with Saul. But you have to realize that he is a Psychologist so has tools that most of us regular human beings don't, when it comes to winning an argument.

Andy,

I thought Saul was a Harvard Math major. Please correct me if I’m wrong. There are at least 2 Saul Rosens out there
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Sonny,
He is a Psychologist.

Andy
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