James,
I respect your decision to substantially increase
a cash position. However, I have a couple questions to you.
>I work for a deep value fund that is
>scared to death to hold cash and "risk" underperforming
> the S+P though every portfolio manager is in cash personally.
> Thats what our clients say they want. If deep
> value investors have no cash, who is going to "buy the dips"?
I've heard you give this argument before. It
was last year at Dow 7500. Why is it valid any more now
than it was then?
>who is going to "buy the dips"? An interesting question.
> Ah, the individual investors. But I know more individual
> investors who are on margin than in cash.
I think you contradict yourself here. First, you say
that all fund managers are in cash (which is not true, look
at Third Avenue and Tweedy Browne guys :-)). Then you say
that all individual investors are on margin. I can add
anecdotal evidence that lots of money is on the sidelines.
And lots of money is still going to come into the market.
I'm in high tech industry and all my graduating friends
are going to extend the market and Silicon Valley real estate
bubbles. :-)
>what stocks look like when you can really steal them.
> That sounds like Japan today.
I'm interested to hear why you think so. From what
I read the cross-ownership, subsidiary accounting and
hidden debts make impossible to value any Japanese company.
I would stick with INTC at 5 PSR and increased competition
but with excellent disclosure instead of buying
a possibly bankrupt operation at 0.03 PSR.
Finally, I still see a lot of companies that I like
long term. Agreed, they are not steals but they are
reasonable buys. Semi-equips are in a cyclical slump where
PEs don't mean a damn. Some semis (INTC, HWP), your
real-estate play SJP, Mike's TBR and poor NKE are interesting.
I am not saying we won't see a crash but I'm not
gonna get out of the market because some idiot in WSJ
writes that stocks are risk-free.
Good luck
Jurgis |
