Roger's 1998 Short Picks Message Board

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Strategies & Market Trends : Roger's 1998 Short Picks

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To: CatLady who wrote (4731)	3/11/1998 4:40:00 PM
From: Pancho Villa	Read Replies (2) of 18691

Cat lady: <<(trivia question: why did Peter Lynch retire at 45?)>> a. because he could? b. he wanted to go out at the top of his 'game' ? What's the right answer Prof.? The got the trivia question right. I think it was a combination of both. He had plenty of $$$ and he is frugal. Second probably he knew he was the 1000th monkey! A+ here. >In your discussions of valuation you almost seem to be implying that holding some stock 'XYZ' has the same risk as holding any other stock? Am I interpreting accurately? < The theory says all stocks should be priced right but not all yield the same return. risk return are supposed to follow a fairly linear relationship with the return for the stock linearly related to the volatility of the stock price (standard deviation). This is the famous CAPM that got Fisher/Black (? need to check my PhD is not in Finance, probably an advantage and not a handicap!) a Nobel price. So buying CCI at around 130+ is not the same as buying AOL. AOL is a heck of a lot more risky/volatile. This has to do with the famous Beta which many now say is a piece of junk! >"Earnings depend on factors which can not be accurately be predicted, these factors are random events (for example you have a wonderful business, A new technology comes by and you fail to adjust)." This is the part where I think the smart investor can gain an edge, by recognizing the hot (or cold) product or technology ahead of the herd. ????? < Most definitely! If you can predit earnings into the future you have made it! Just buy hold/ sell hold your short and forget about the circus and the clowns! You will do much better than Cramer (don't know how well he does on a risk adjusted basis. He seems to be beting in options that may expire worthless a bit here a bit there and you wash out your return. You will always talk about your current good trades more than the bad ones. Natural tendency we tend to forget the bad stuff. he trades a lot. it is not as easy as he makes it appear. To make money in a bull market all you need to do is go long). I pulled this out twice last year with plenty of margin too! IMO the more you trade the more decisions you need to make and you use less time to evaluate each decision the lower the quality of your decisions the greater your error rate which gets compuended by your losses in transaction costs, not the 9 bucks but the spread. I have experienced this myself. For example made a couple of bucks on an OXHP trade but sold DAI (mercedez) at 72 at a $6 loss two weeks ago. Check a quote today! Pancho

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