Dabum, my reply on why I've dipped a toe into the rubble of the stock market. Three reasons really:
I buy for different reasons than most people who post their thought processes on these boards. I try to look for valuations and stories. The valuations in the patch are getting pretty attractive, some along the lines of where they were in '98. Those companies that show nice numbers, particularly PSRs of less than one, are the ones that tend to grab my attention. I sometimes rationalize by what Peter Lynch said - something like "if I liked it at $10, I love it at $8".
The second reason is that the market is wildly unpredictable right now. We could get any number of flake rallies in the next few months of downward movement as people finally see how bad the economic situation is, and how badly they've been deceived by Wall Street, the media, and our government. If we get a nice pop I'll take a quick buck any day. If we grind on lower, I'll buy more. There's also the odd posibility that we have an attack on our very vulnerable, and JIT oriented energy infrastructure. Anybody who planned and executed the attack we saw could bring our refining & pipeline infrastructure down just as easily - scary thought huh?
The third is that I'm talking about pretty small stuff. My portfolio is close to an all time high, so I'm feeling a little frisky. The energy buys to date are about 15% of portfolio max, and I've still got lots of cash left - so what, me worry? A little taste makes me watch them closer, and my general strategy is to buy much more if the price drops - as long as the story is intact.
So, those are my reasons. Yes I have often taken a 25% loss in the past by buying early, but I've always come out ahead in the long run by averaging down - the steeper the drop the more aggresively. If we get anywhere near the PSRs of 4 & 5 that we saw at the peak of this cycle, some of these shares are certain two baggers, and maybe three.
Sharp |
