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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Mike Buckley who wrote (46157)	9/3/2001 10:33:25 PM
From: Stock Farmer	Read Replies (3) of 54805

Hi Mike, I buy that. I do not mean to be insulting to say "irrational". I am using its more clinical definition, which is to say "in a way that defies analysis". You used the word "luck". I think we actually agree. But we are on to something important here. The math is relentless: as long as you buy back a stock like Seibel for less than you sell it for, you will profit more in the end than holding through. After tax. The only operable question is whether or not one actually believes that the stock is overvalued, and then whether one acts rationally on one's beliefs. Because here you state quite staunchly on the one hand that you believed a company is overvalued. And on this thread you have made several references to this statement. Yet on the other you neither acted rationaly (correctly, because the correct rational action for a profit motive is to sell the stock planning to buy it back later) on this belief, and when questioned offer evidence that the belief was not strong "Your explanation presumes a greater confidence than I could ever muster in the knowledge that you'll be able to buy back the same shares or other shares so substantially cheaper that you can justify taking a tax bite. Being so certain of the future isn't my strength." Or, in other words that you believed something that you did not believe enough on to act, or that you thought your actions were in accordance with your beliefs, when in fact they were not. Either way we have an "irrational" situation. Which I admit is a situation I find myself in so often that it can not be anything other than fundamentally human. "To err is human, to forgive devine". Sorry I put your irrationality in the spotlight, but you presented it so nicely, and I do think that this kind of behavior that I ALSO EXHIBIT is a fundamental cause of bubbles. John.

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