Subject: DG earnings
Dollar General reported fourth-quarter earnings of $1.83 a share, and revenue of $9.86 billion. Consensus was $1.73 a share on revenue of $9.77 billion, so both were beaten a little - perhaps nothing remarkable, but with poorer Dollar Tree results yesterday, some investors may be upbeat (mistakenly or not) about Dollar General's competitive/managerial advantage over Dollar Tree, or at least starting to recognise that DG (PE 19 post this morning's gain) was a little better from a valuation perspective compared to DLTR (PE 24).

Congratulations to mungofitch for having a good instinct for DG (relative to DLTR) over the second half of 2023 as a good investment opportunity (starting in mid June 2023 but persistently through the rest of 2023 during the quote lows) following the largest quote falls in early June.

I do not know any investor (I don't mean just personally, but also observing at a distance) also who has done well over time by trading (trading 'in and out' of positions in single stock) according to news releases. When information is publicly available, the quote reacts not only (1) immediately as the news is available, but worse (2) it tends to reacts in an exaggerated manner.

Indeed news can effect the estimate of intrinsic value 10 years into the future, and your calculation for the long-term investment return really may have changed quite a lot after the news. But rarely have the long term prospects changed. This was the a key insight from Ben Graham. He put considerable attention to observing that the earnings would move up and down three of four times over, say, 10 years, with only a gradual upwards trend. Each - rather steep - earnings swing was transient, and hardly related to the slight upwards trend. Most importantly, the quotation would follow these transient earnings changes almost 1 for 1 - he would graph the EPS and the quote and show that they followed each other closely, the quote treating each EPS change as a permanent change.

Today the market is a little more efficient than back then - yet it still treat recent conditions as rather too permanent. If you want to be a good investor today, I believe it is useful to think longer-term than the bulk of the market and recognise news releases as one data point in a change of many future news releases (further data points, both positive and negative) and do not treat the latest news release with more prominence than the enormous chain of all news that is going to be observed in the next 10 years or so.

- Manlobbi