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Strategies & Market Trends : Value Investing
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To: Allen Furlan who wrote (12110)2/22/2001 5:32:08 PM
From: Allen Furlan  Read Replies (2) of 78614
 
To the thread. What is value? In my mind it is when potential return significantly exceeds risk. Repeat the situation many times and you have value even though the situations may focus on stocks which on their own merits are not worthy of a value rating.
Two examples. High probability of success but moderate overall returns, Example arbitrage. Usually works out but kicks you hard when there is a failure. Second example, leveraged ratio writes of options against stock. This week I bought 3000 shares of waxs and sold 60 Jan 2003 5 calls. Net cost $75 cash and margin set aside of $300. No downside risk and very small upside risk since this company is so highly leveraged that it has almost zero chance of being bought out. If stock stands still for 2 years this is a 30 bagger.
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