JH Grandgerard

I've been investing since 2000 and teaching it since 2010. These days I mostly write about what standard valuation methods get wrong.

[JH Grandgerard @JH_Grandgerard]

@darrelltalksfi Fair, that's annoying. Big brands botch products all the time, and plenty fix it before it hits the numbers. Nike's debt is under its equity, 0.7x. If the annual numbers turn red in a year or two, I swap it out. Till then it's a good player in a slump. I can sit through a slump.

[JH Grandgerard @JH_Grandgerard]

If you sold Palantir $PLTR early to lock in a small gain, you'll probably still check its report tonight.
⠀
You got scared of giving the gain back, then watched the stock keep going without you.
⠀
It happens over and over, and it's almost never about the company.
⠀
Palantir's sales grew 93% last quarter.
⠀
On a red day, most of the fear is just in my head.
⠀
So I write down why I own a company, a reason I can check in the annual report.
⠀
I only get out once that reason stops being true.
⠀
Staying put through a scary week gets easier with time, like a new driver getting used to the highway.
⠀
If I had Palantir, tonight I'd skip the after-hours price and read how much sales grew.
⠀
What's your rule for when to let go of a winner?

[JH Grandgerard @JH_Grandgerard]

@doughboysfn When they report, I'm only watching one number, US commercial revenue. It grew 149% in Q2. I don't let one stock run my account, so I'll sleep fine whatever it does next

[JH Grandgerard @JH_Grandgerard]

@victortomasecom Search revenue growth slowed two quarters in a row, 19% down to 12%. I go by the full year, so a couple of quarters won't keep me up at night.

[JH Grandgerard @JH_Grandgerard]

@Trader_Saan I'd do neither, I don't trade the chart. I go by the business, and Google Cloud revenue grew 103% last quarter. A dip is like turbulence to me, it feels worse than it is.

[JH Grandgerard @JH_Grandgerard]

@MDCTrades305 Can't give you a pick. I always look at debt first. Oracle's is 2.3 times its equity. If I buy without a real reason, I've got nothing to hold on to when it drops.

[JH Grandgerard @JH_Grandgerard]

@value_invest12 Fair, the cash is there, $168B from operations over the last year. Capex ate more than that though. I'm not against the AI spend, I just want to see it come back as cash. Spending that big can take years to pay off, and that wait is where most people bail

[JH Grandgerard @JH_Grandgerard]

@AKWilk A lot of the reaction is to the headline number, and that can hide what's going on. Coinbase showed $719M of net income, most of it from crypto it holds going up. I skip the first-day move and read the cash flow. That takes some stomach the first few times

[JH Grandgerard @JH_Grandgerard]

@darrelltalksfi Not panic-selling is the hardest of the three. Easy to say until the S&P drops 34% in a month, like in 2020. I own individual stocks and it's the same test. The first big drop is the worst one, after a couple you can stick to your rules without flinching.

[JH Grandgerard @JH_Grandgerard]

Chevron $CVX reports this morning, and if you own it, the noise comes at you from two places, the headlines and your own head.

The headlines will mostly be about the price of oil.

The voice in your head keeps asking if you should still own it.

Tuning out that voice is something you train, like any muscle, with reps.

A morning like this, when you read the report and don't touch anything, is one of those reps.

I keep a company the way a farmer keeps a cow, as long as she gives milk year after year.

A neighbor going on about the weather doesn't change how much milk the cow gives.

If I had Chevron, I'd check that the $1.78 a share it pays every quarter comes out of the cash it makes and not out of new debt.

What headline almost pushed you out of a company you still own?

[JH Grandgerard @JH_Grandgerard]

@MohanadInv Rules set ahead of time make a 7% day way easier to ignore

[JH Grandgerard @JH_Grandgerard]

@investwithjohn9 Tough one for sure. I'm keeping an eye on FCF, -$9.1B last quarter with all the AI spending. Drops like this get easier with reps, kind of like the gym.

[JH Grandgerard @JH_Grandgerard]

@robertratcliffx Revenue up 26.8% says the business is still growing. EPS can jump for lots of reasons, I trust the cash flow more. To me a drop like this is turbulence, it feels worse than it is.

[JH Grandgerard @JH_Grandgerard]

You can be right about Eli Lilly $LLY and still get hurt by what you paid for it.

Lilly reports this morning, and last November it became the first drugmaker worth $1 trillion.

It's like the hottest concert in town: the band plays the same songs whether you paid face value or scalper prices.

If you paid scalper prices, every bad quarter is a lot harder to sit through.

You build the nerve for it like a runner, a few more miles every week.

I'd look at its debt and its cash first and the price last.

If you hold Lilly or you're thinking of buying it, to me it's expensive next to the cash it brings in each year.

Which stock did you pay scalper prices for?

[JH Grandgerard @JH_Grandgerard]

@wheelwithyosef I use the same rule for buying shares. My price comes from the cash the company brings in each year, then I wait. Green days like that 1.2% on the Nasdaq are when it's hardest to stick to.

[JH Grandgerard @JH_Grandgerard]

@anujprajapati11 Stocks, but not all at once. I'd spread it over a few months into companies with real cash and little debt. Some stays in FD so I'm never forced to sell. The hard part is the first time it's down 20% and I have to keep my hands off it

[JH Grandgerard @JH_Grandgerard]

Once Microsoft $MSFT and Meta report tonight, your feed will fill up with people who called the move perfectly.

The ones who got it wrong don't post.

So you start to believe there's a method out there that never loses.

There isn't one.

Every method has losers, mine included.

Switch methods after two of them and you're back to square one.

A plant you keep moving never grows roots.

I think of investing as a table with three legs: a simple method, emotional muscle and discipline.

When a loser hurts, we blame the method, but most of the time it's the stomach that gave out.

This week is good practice for sitting still, with Alphabet, Microsoft, Meta and Amazon all reporting within 3 days.

My companies stay right where they are tonight, no matter what Microsoft and Meta do.

How many methods have you gone through so far?