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Strategies & Market Trends : Buffettology

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To: jhg_in_kc who wrote (724)	12/23/1998 3:47:00 PM
From: James Clarke	Read Replies (4) of 4691

<<The problem with [here I insert, Buffettology true believers] is that they talk valuation but don't understand it. To put it very simply, value is in the eye of the beholder. Real estate and ketchup are both valued on the same basis: what a willing buyer and willing seller agree to.>> Well, duh. Of course a share of AOL right now is worth $137 because I know I could call my broker and sell it for that. If somebody offered to sell me 100 shares at 134, I'd buy them, and then run for the phone to call my broker. That is not at all what value investing is about. Why are AOL shares worth $137? Its a great company. Its a growing industry with a big future. So why not $120? Why not $70? You ridicule me for being too methodogical in valuation work. Do you do any valuation work at all? In my opinion you think you understand one of the three tenets of Buffetology, which is buy great businesses. But you have displayed zero understanding of the other 2/3, which is buy businesses which you can value and buy them at a margin of safety to that valuation. Jim

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