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Strategies & Market Trends : Value Investing

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To: Michael Burry who wrote (4735)	8/21/1998 7:01:00 PM
From: James Clarke	Read Replies (2) of 78599

I am more than 50% in cash, and raised another 10% today, but what I have in stocks is outperforming on down days. (Though underperforming on up days). The reason I think is dividend yields. Half of what I am still holding is in USEC, yielding 7 1/2% and two REITS yielding 8 and 10%. Also have a large part of my remaining portfolio in PSO, which is trading below net-net value, has a decent yield and is not owned by institutions. FWIW, I sold the last of my St. Joe today. The problem a lot of value investors are having is that they considered beaten down cyclicals defensive. I am working on a statistical study for my firm which I will post when appropriate, but the gist of it is that you're not going to see a bounce in these until the end of the year. In the '87 crash, already beaten down cyclicals got murdered even worse than their overvalued counterparts. Cyclicals have definite seasonality, and going into the fall is absolutely the worst time of year to own them. I'll develop this further over the next couple months if anybody is interested. Jim

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