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Politics : Ask Michael Burke
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To: Ilaine who wrote (38357)12/6/1998 3:30:00 PM
From: accountclosed  Read Replies (1) of 132070
 
>>>>>one thing an investor can do is not look to the market to validate the value of one's holdings<<<<< I have no idea what you mean by that.

I agree that you have no idea what I mean by that. This is what we have been going around and around on. The idea of value investing is that the investor makes a model and determines the value to the investor of a company (hereinafter "Value"). The stock exchanges provide to us prices and quotations of securities on a tick by tick basis these days (hereinafter "Price").

Your position:
My position is that my "holdings" are worth what a willing buyer would pay a willing seller on any given day

My position:
My holdings are worth what Value I put on them. The markets are like an auction going on that I might or might not listen to. I might or might not buy if I see something where Price is sufficiently below Value. I might sell something if Price is sufficiently above Value. Price and Value are totally different concepts.

==
I also think that lots of the people that post on SI (not you) have too much money on the table. Then the distinction between Price and Value blurs. For instance a margin call can blow that distinction totally out of the water. When people have portfolios that are too big for their finances, they can't be patient. Bad decisions get made.
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