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Strategies & Market Trends : Value Investing
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To: James F. Hopkins who wrote (4412)7/12/1998 1:32:00 PM
From: Paul Senior  Read Replies (1) of 78748
 
Yeah, very good post James -g-. Nice to see your occasional hit-and-run post here that repeats your opinion that value investing doesn't work, and that we need to do this new thing you've come up with. Juices up the thread on a quiet Sunday. Nice to see also that you're packing your post with some stocks and prices, and that you've got some help in cleaning up your English and spelling.

Of course you provide absolutely no evidence that value investing is crippled. I don't see why balancing your MOMO stocks every three months is optimum or why transaction costs are not important. I don't see that culling losers from gainers is better than picking the losers. (I would guess the tendency for value investors would be to go with the stocks that haven't yet moved as much.) I don't see where anyone has tried this method successfully, or even that you yourself use it. Nor is it clear how best to reallocate (by $, by percent increase/decrease in price, some sector balance,50 stocks only). And risk/reward tradeoffs are not considered. (As in 'margin of safety' that is often associated with value investing) Nor are any tax implications considered. (Although I assume your method is for IRAs/401s/etc.)

Basically you are saying buy a sample of big stocks that everyone is buying (indexing on) that are going up. If they don't go up, don't buy 'em. Sounds to me just like what Will Rodgers once said--I think before the market crashed.

Anyway you get credit from me (FWIW) for creative ideas, but as far as this actually being a better way to invest than value investing... I don't see it.
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