CNBC Pro Talks: Jim Lebenthal on why going back to the fundamentals will make you a better investor 6/7/24
Jun 7, 2024
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Jim Lebenthal, a veteran investor with a science-minded approach to fundamental analysis and value investing, discusses his unique background and how he uses different fundamental analytical tools to find price-to-earnings growth ratios of stocks like Amazon and Nvidia. He also talks about incorporating tools from technical analysis and answers stock-specific questions from Pro subscribers, emphasizing the importance of going back to the fundamentals for better investment decisions.
Fundamental analysis is key for making informed investment decisions based on company values and cash flows.
Maintaining a long-term perspective amidst market volatility helps investors distinguish between noise and signals for better decision-making.
Deep dives
The Importance of Fundamental Analysis in Investing
Building an investment thesis based on fundamental analysis is crucial for making sound investment decisions. Fundamental analysis involves understanding the inner workings of a company, assessing cash flows, and earnings to determine the value of an investment. By focusing on fundamental building blocks like price-to-earnings ratio, PEG ratio, price-to-book, and dividend yield, investors can make informed decisions about stocks.
Balancing Long-Term Investment View with Short-Term Volatility
Fundamental-based investors like Jim Labenthal emphasize the importance of maintaining a long-term view amid market volatility. Balancing the long-term perspective with short-term fluctuations requires discerning between noise and signal in market information. While short-term noise may impact stock prices, focusing on indicators like initial weekly jobless claims provides a clearer signal for long-term investment decisions.
Artificial Intelligence and Fundamental Analysis
Artificial intelligence is poised to disrupt investment strategies through data analytics and screening processes. While AI can efficiently analyze numerical metrics and ratios, the human element remains essential in interpreting softer aspects of investing, such as qualitative company assessments. Integrating both the quantitative tools of fundamental analysis and the qualitative insights from interactions with company stakeholders can enhance investment strategies.
Veteran "Halftime" guest and investor Jim Lebenthal sat down with CNBC's Dominic Chu to discuss how the former nuclear engineer and U.S. Navy officer created a science-minded approach to fundamental analysis and value investing that has led to a decades-long career on Wall Street. Lebenthal goes into detail on how he uses different fundamental analytical tools, walking Pro subscribers through how he finds price-to-earnings growth ratios of stocks like Amazon and Nvidia. He also gives examples of how to incorporate tools from technical analysis to help augment his decision-making process, and fields stock-specific questions from Pro subscribers.
CNBC Pro Talks features one-on-one interviews with Wall Street’s top investors, smartest traders and rising stars. CNBC’s Dominic Chu finds out what makes them tick, what makes them money, and how you can follow in their footsteps. CNBC Pro Talks is a monthly interview series that’s part of CNBC’s premium subscription service, CNBC Pro. To hear the full Pro Talk interview—including specific stock picks and investment strategies—listeners can subscribe to [cnbc.com/protalks].
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