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Strategies & Market Trends : Value Investing
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To: Suma who wrote (21038)4/4/2005 1:19:02 PM
From: Paul Senior   of 78903
 
Yes, Suma. It's a statistical approach for me. I like to buy a package of these type companies (if I can find them) and hope the winners go up more than the losers fall. Only rarely do I find any of these companies to have earnings when I buy them. (Others though, perhaps Brinks for example, may have better success or screens in finding profitable ones.)

Some additional background info. for you:

In past I've tried to bring some judgment about the business or business prospects to the purchase decision - I have tried to evaluate why each of the companies seems to be so downtrodden and evaluate the prospect of a turnaround. I've been very wrong in some of my judgments. For example, I passed on SINA (a great Steve168 call!) which rose maybe 50x from where it sold below cash. I keep trying to avoid making judgments for stocks in this particular category (below cash plays), but I find it very difficult to stop myself from doing so.

Others will only buy if they have analyzed the company and prospects and believe they see opportunity or catalyst. Brinks and TPE is an example perhaps.

I've not kept good records of my performance here. I believe most of these stocks have worked out. Losses have occurred in one of three ways:
1.Company disintegrates - wiping out the investment.
2.I lose patience and sell too soon. (Patience is often required here: 2-3 years is reasonable.)
3.The gains are so small as to be insignificant - especially if the time value of money is considered. (Perhaps knowledge of the company's prospects and only picking one or a few of these companies lets an investor more confidently make bigger bets and get more profits than I do. That way is too risky or difficult for me though.)
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