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Pastimes : John Dessauer's Investors World
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To: Ralph C. Cinque who wrote (1598)9/29/1998 8:15:00 PM
From: Wren   of 2346
 
The current issue of Forbes has an article on Louis Marx, a private venture capitalist. In discussing the approximately one in four investments that do not make it, Mr. Marx said, "When I get involved with companies and people, my tendency is to go further with them than I probably should. Sometimes you don't see that until it is too late."

I believe that JD has the same weakness. He gets "involved" with companies and the management of the companies.

I have never met JD. He comes across on TV and in print as a friendly person. He undoubtedly builds relationships with the principals in the companies that he recommends and follows. Then he hangs on longer than he should. If it was his own money that was going down the drain, this would be fine. But, I would like him to point out the negative signs to me, so I can save my money if I choose to do so.

He reminds me of a local money manager who once handled some of my investments. This man was a good stock picker, but did not have a good exit strategy. He put me in CML about 1991. This was a retailer which principally sold mail order exercise equipment (NordicTrac). It did great. It was advertising on TV constantly. The price went up about 600%.

Then it turned and went down over several years. When I took control of the account, I immediately sold it for about one half of my cost. The advisor said that he talked to company people a number of times and they kept telling him all the things that they had in the pipeline, and he kept waiting for the stock to turn around.

Talking to company people can draw you into inaction. An advisor ultimately needs an exit strategy based on some specific event, and needs to pull the trigger when such an event happens, no exceptions!!!

I hope JD reads some of the postings that have appeared on this thread in the past few weeks. IMO he could be really good if he would make a some changes in the follow-up after the initial recommendation.
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