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Strategies & Market Trends : Value Investing

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To: E_K_S who wrote (20336)	12/25/2004 11:40:44 PM
From: Steve168	Read Replies (1) of 78594

EKS, thanks for your great insights. Real estate could be one of the biggest "undervalued" asset on books since they are recorded at cost on balance sheet. If you find any stocks that are undervalued on this basis, I would probably buy some. As you pointed out, this approach has risk too. K-mart went into bankruptcy with a lot of undervalued real estate. We could have believed in its value and lost all money as common stock shareholders. It took a big guy like Warren Buffett or the new K-mart CEO to realize that value. However they may prefer to let bankruptcy wipe out old common stock shareholders before jump in. It is sad but why would they give those people a free ride. Those are the smartest capitalists aim to maximize their own profit. Diversification is a key to avoid disaster. Same as when I buy those below-cash no-debt tech stocks. They all have problems and risks, but if you have a diversified portfolio, you would likely beat the market 8-9 years out of 10 years, except the crazy years of 1998 and 1999.

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