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Strategies & Market Trends : Value Investing

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To: Micah Lance who wrote (57554)	7/18/2016 11:24:10 AM
From: E_K_S	Read Replies (1) of 78954

I use the low rates even the 10 year rate. I think interest rates long term (as evidenced by negative rates in Germany) will be low for quite sometime. Based on that, valuations are not high but sustained earnings are the key. I also am focused on companies w/ low leverage and/or companies that are paying off debt (rather than stock buy backs). So I use Buffet's ruel of thumb measure; 4x annual net income <= total LT debt. I like the GN valuation model and up to a 24 month holding period. Most of my best gains is buying at/below the Graham value and selling when it exceeds that valuation by 10% or more. I also like buying at/below BV but I look at tangible BV and back out Goodwill. Many of my Graham No. positions are turn around situations and typically require some significant management decisions that are slow to play out. Therefore, it's hard to quantify management other than insider Buys so I look at their recent Buys too. I do have a high cash position (almost 8%) but am always starting new positions if/when they present themselves. One reason for my cash is I am peeling off my high cost shares in many positions (I typically make several Buys when building a position) to book small gains and reduce my avg cost. As the market makes new highs, I am a net seller so far. I have been parking cash in some old preferreds (at PAR and below) that can be called; MHOpA is one name I recently bought (originally issued 3/2007). It's liquid enough so I can use as a source of funds if needed but pays a nice high yield w/ a 15% max tax. One must be careful as they are subject to the cyclical nature of the building industry (they are a home builder) so you only want to own them in the up part of the cycle period. Hope that helps Good Investing EKS

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