Quote: (01-03-2018 11:18 AM)JimBobsCooters Wrote:
Quote: (01-02-2018 06:13 PM)Tail Gunner Wrote:
Quote: (01-02-2018 05:48 PM)Cane Toad Wrote:
Quote: (01-02-2018 12:02 AM)Tail Gunner Wrote:
If there is a substantial stock market correction, these sectors will likely become even more undervalued and become a distressed asset.
A mine might be worth $1 on paper today, but it's not a distressed asset. It only becomes a distressed asset when the owners are forced to sell - and for $1 most owners will just sit on their assets until market conditions improve.
So anyway, hope that clears up my initial comments.
Fair enough. I agree with most of your analysis. I used the phrase "distressed asset" in the broader sense, as when an asset's value is severely depressed -- thereby presenting a great bargain when buying a company's stock. Often the value of an entire business sector can be severely depressed, which often occurs at the bottom of a cycle in a business sector. If the bottom of such a cycle also happens to coincide with a stock market bottom where investors are frightened and deleveraging, then you can really pick up very deeply discounted stocks.
When you use a very specific term, such as "distressed asset" incorrectly it makes everything you say harder to trust or believe and generates worthy questioning of your post.
While your overall point is actually a good one in regards to market cycles it is being undermined greatly by your misuse of that term.
I did not misuse the term. Words have various connotations. I used the broader meaning. When Warren Buffet invested in the stock of Amex and Bank of America they were "distressed assets." Such assets tend to become distressed at sector cycle bottoms or market bottoms.
Quote:Quote:
"Bank of America plays into Buffett's affection for distressed assets. Bank of America is turning into Wells Fargo right now."
In recent years, how much Buffett has made from the deals to buy into Bank of America and Goldman Sachs during financial distress highights his rule to be greedy when others are fearful, and a lot of bank investors have been very afraid since 2008.
https://www.cnbc.com/2014/09/25/why-buff...tocks.html