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Strategies & Market Trends : Value Investing

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To: Chuzzlewit who wrote (3570)	3/22/1998 4:20:00 AM
From: Paul Senior	Read Replies (3) of 78572

Paul: I don't buy any of this. Too much opinion and too much anecdotal evidence. Hard to take you seriously when you say to me that value plays are "rare" and a "mistake" - when that's how I make money. "2. Don't try to time the market; it can't be done." Every standard book on investing says this -- but is it true? Hulbert tracks performance of newsletters, and he's got some market timers who he says do in fact beat the market (on a risk return basis), do so consistently, and do it for many years. "3. Real value plays are rare, and in a sense you too are trying to time the market. This is a mistake because the value plays are frequently value plays for a reason." Not sure what you mean by rare. I find such opportunities once per every couple of weeks maybe. Don't need too many opportunities to make good money. Of course there's a reason they are value plays. That reason is possibly why the price might be below fair value. Value investors buy below fair value and sell at full or fair value. Couple of weeks ago somebody said this was momentum investing. Now it's market timing. You seem to imply that choosing the point to buy and choosing the point to sell is market timing. Okay. It certainly is compared to the method you are suggesting which is buy some growth stocks (regardless of price apparently) and just hold them until they ain't growth stocks any more. I will reiterate my desire: I am looking to invest to make money - not to make percentages. I believe I have to do the things that successful people who have gone before me have done if I want to be successful too. The Graham value methodology works. The Buffett way works. The O'Shaugnessy way may work too. What you are saying may work for you- but IMO, there's no evidence that it's a method that is viable throughout a market cycle or any evidence that it's equal to the work done by the people who I am trying to follow. Paul Senior

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