>50% would be in classic value plays
>and 50% in classic growth
I am uncomfortable with this approach for two reasons.
First, I am usually uncomfortable with classical value
plays: i.e. shoddy companies under X value. Exception:
high-yield REITs where you get that 10% dividend
while waiting.
Second, I am uncomfortable with nosebleed valuations
of the classic growth (e.g. current SUNW, LU, CSCO).
It's totally unclear where we go from these levels.
It may be up, but I lack any conviction.
So I am going with "growth/quality at a decent price".
What is that? Nobody knows. I recently bought MAT, SGP,
and a tech company which are on different ends
of "growth/quality at a decent price" spectrum. My
restriction always was and is available cash. Sometimes
that's a good restriction (not buying MAT @ 20),
sometimes bad (not buying ADBE @ 20). But main rule that
I noticed is: If there's nothing to buy, don't buy
anything. Don't lower quality, don't pay higher prices,
and don't try to justify them. High quality companies at
reasonable prices will appear soon.
One thing that I have not figure out yet is
the sell decision. I haven't
made a "hold forever" decision on anything except BRK.
My longest term holding is PEP, which has done nothing
for 2 years that I am holding it. It is much more difficult
to continue holding after a substantial runup, because
of the high valuation and "round-trip" fear. Perhaps
a stepwise reduction of position is an answer.
I don't subscribe to the school of selling at a loss,
unless there's a good position switch or the original
idea does not hold anymore.
Jurgis |
