r/valueinvesting
Flight to Value: You're getting a small preview today as to what is to come...
Author predicts a 'flight to value' as AI bubble unwinds, favoring SaaS stocks like CRM for strong FCF and solid balance sheets.
- Capital is shifting from speculative AI assets to undervalued SaaS companies with strong fundamentals.
- SaaS companies possess rock-solid balance sheets and strong free cash flow, ideal for high inflation and interest rate environments.
- Current market trends indicate a routine capital allocation shift towards value stocks.
Today is an excellent preview of the "flight to value" phenomenon that occurs when capital shifts away from high-risk, speculative assets and into undervalued assets with strong fundamentals. AI stocks are going down and the SaaS companies that have been an endless conversation on this subreddit are going up.
This is just one day so who knows what will happen in the near term, but today is just a small glimpse into what will happen when the AI bubble unwinds. Companies like CRM, NOW, and other SaaS companies that have gotten beaten down will rise.
Additionally during periods of high inflation and higher interest rate capital flows towards companies with high FCF and again these SaaS companies have rock solid balance sheets and strong cash flow.
These market trends play out again and again, it is routine and standard capital allocation. If you have a medium to long term perspective and you're not positioning yourself for this you should seriously take some time to consider it.
Yeah they may be up 800%, but lets not forget who has the moral high ground.
Value investors sound smart while they lose money
Growth and momentum investors sound dumb while they earn money
Value investors sound smart while they lose money
Is it not smart for a man to lose on his investments, if he tells you it was deliberate? Perchance.
Try not to go straight to ad hominem attacks it immediately discredits whatever else you're about to say.
The number one trap I've fallen into as a value investor has been well loved companies slowly losing their edge and their business model, falling out of fashion and dying a slow death.
They look exactly like sure-thing undervalued companies, because time and time again, all the estimates and ratios point toward their long time growth rate, and great value opportunity, when that growth rate is a fiction from a decade earlier.
My rule of thumb now is that, if the value play is an institution, and not a small cap Russell stock, I really need to give it a second look, and I need to actually talk to people who use the product and see what they think.
In that case I’m Jesus.
I can read between the lines. He's saying that there's a huge shift coming and based on one day of price action. He's using one data point to try to validate his opinion of a massive shift.
half cash / half news?
NVIDIA, Anthropic, OpenAI, and Google are all customers of Servicenow. 97% customer renewal rate. 20% revenue growth a year. They are successfully moving to usage/outcome based pricing and away from seat based revenue.
A company like this deserves a premium over CSU where if you take away its acquisitions it is barely growing.
Not all software is the same. If you think it is, then sure buy ADBE, the cheapest of the bunch, and pray that their outdated business can continue squeezing money from their declining customer base.
This OP is gonna curse the SaaS baggies....I swear he probably is a child that felt the urge to do a victory lap 😂
With this post, the wall street is again drive down SAAS again. THANKS OP!
Bro is comparing 5% gain compare to a generational run this past year 800-900% gain on AI buildouts.
value investor claiming victory after end of quarter re-balancing
It's just a tool. Good one, if you know how to use it. That's it. Anybody who actually uses it to deliver PROFESSIONAL results know this.
Another low substance FOMO post 🤣 you must have forgotten the dead cat bounce at End May, and it was merely a month ago. Anything can happen in the market, don't be so naive to think a days worth of a big green candle means a reversal