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Strategies & Market Trends : Value Investing

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pgo-neil

To: Paul Senior who wrote (54704)	1/4/2015 1:06:28 AM
From: Jurgis Bekepuris	1 Recommendation Read Replies (2) of 78627

I have to say that I agree with both you and with Elroy. :) My investment approach is closer to yours although I don't have 120 stocks, but I had around 60. And I completely understand how new stocks seem attractive for one reason or other and I just keep adding them to the portfolio. I also understand how it would be hard for me to buy a single (or even couple) stock to 30% portfolio and keep it for X bagger. I also noted what Elroy said that it becomes harder to buy large positions as portfolio becomes bigger. When you are investing portfolio that is 0.5 your yearly salary, 30% position is just ~2 months salary and its loss does not seem that terrible. When you are investing portfolio that is 10+ years of your salary, 30% position is 3+ years of your salary and that might be rather scary to lose... (Although one could also lose the same 30% in market crash that decimates all stocks, but somehow that seems less scary?) I also agree with Elroy that concentrated positions are usually key to market outperformance by larger margin. I also understand where he is coming from when he talks about buying a lot more if a previously known stock in portfolio drops. Here I agree with both of you again: Agreeing with Elroy, for some companies stock dropping a lot because of some reason is a clear signal to add because you just know that the reasons are not going to destroy the company and stock will recover with big gains. Agreeing with you: for some companies, stock dropping a lot just exposes that I did not know jack about the company and I'd better fold or not increase the position at all. :) Do you remember how it was in the runup to 2000/2001? Did you experience similar market underperformance then? My portfolio was very small then, so I can't really say for sure. I just wonder if recent underperformance of spread out value portfolios (like yours and somewhat mine) is due to market runup to high valuations (I don't want to say bubble yet :)).

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