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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (27334)7/19/2007 8:56:04 AM
From: Grommit  Read Replies (1) of 78717
 
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For most investors in general, selling the expensive asset, and buying the cheap asset, seems like a logical strategy - except when you actually try to do it. Because most people are actually not wired to be selling what's expensive and going up, and buying what's cheap and going down.

I'm always much happier when stocks are trading at their 52 week lows than I am at 52 week highs. It's simple: If you have a valuation discipline, then you know that stock prices change more rapidly than business value... And that's where people get into trouble, because they perceive risk to be high when prices are low, and they perceive risk to be low when prices are high. That's the psychological problem that most people have.

And, more importantly, a thoughtful individual investor doing a moderate amount of homework can easily - and I emphasize easily - do better than the S&P 500.
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