No. of Recommendations: 22
average in, buy all now or other?
The opinion of one random guy on the internet:
The stock seems to be a bit more fully valued than has been typical in the last 20 years.
I'd guess it's trading somewhere around 1.52 times the book value per share at end 2025, which we'll know in a couple of weeks. The average has been around 1.4 times most recently published book. So, a VERY ROUGH guess, one might estimate that the stock is currently about 8.5% more richly valued than average.
That isn't really enough to worry about too much. Worst case might be that, for a 10 year hold, you only get 9 years of value growth plus a flat year. (your annual rate of return would be less than 1%/year lower than if you'd bought at the average valuation level, over 10 years). And even that forecast assumes that the valuation level in future will resemble the multiples in the past--today might BE the future average valuation level, who knows?
So...you could buy the stock now and still sleep well. Yes, there will probably be a slightly cheaper price sometime in the next year or two, but so what? Prices change all the time. It'll be OK.
If you think you'd feel bad about owning it during a price dip, one approach I often suggest to people is to split the purchase in two.
Buy half now. Wait a few months and try to buy the rest at a lower price if you see the market dip. If you haven't seen a lower price within six months (or by year end, your preference), buy it then at whatever price it's at. The reasoning is this: if the first price is higher, you'll feel like a genius for having waited to buy the second half. If the second price is higher, you'll feel like a genius for having bought some of it now. "Minimize your maximum regret".
Bottom line: even though I personally rather expect we'll see lower prices at least briefly in the next while (6-12-18 months??), that might be of interest to me but not ultimately very important to you.
The stock is certainly less overvalued now than when I bought my first shares at about 1.77 times book, and I've done fine. Incidentally, my first purchase was split in two chunks a few weeks apart. The second half was 8% cheaper : )
Jim
