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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Mike 2.0 who wrote (8596)	10/11/1999 11:07:00 AM
From: Terry Maynard	Respond to of 78748

You are addressing the price side of the business. The price gets our attention enough to evaluate the business strength IMO. Your damaged can could be a name brand, the house brand or generic label to continue your analogy. It is the damage and the resulting drop in price that brings it to the radar screen of the value investor. T

To: Mike 2.0 who wrote (8596)	10/11/1999 11:31:00 AM
From: jeffbas	Respond to of 78748

I'll bite. I do not disagree with how we discover "value" candidates. However, the trick is to distinguish ones which are within our purview which are there for temporary reasons rather than for permanent ones. In other words, is the dent in the can of long run importance or not. In my opinion, in the case of the greeting card companies, and perhaps for XRX, there have been structural changes in their businesses that are important and of long term significance. Even in those kinds of companies where there have been structural changes of importance, like an EBSC where the flagship downtown store model is not where it is at, we still have the opportunity to judge whether the problem is lethal or not-fatal and way over-discounted in the stock price. For what it is worth, I consider the greeting card company problems more serious than those of XRX. However, I think that XRX situation has not been adequately discounted by the market for us value investors, and may never be since it is a large cap stock.

To: Mike 2.0 who wrote (8596)	10/11/1999 12:30:00 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78748

MOO, you are saying value investing feels like it's not working for you? I say that feeling is normal. Buying and holding damaged goods (and, -g- for dented cans- eating the stuff inside) - and doing it over and over again - that is an uncomfortable proposition. (As opposed to buying growth stocks where you get a lot of positives - analysts, media, posters--- -g-as long as such stocks continue to rise). If you are saying that "your" value investing is actually not working for you, you might think of changing your style/methods. For example and for consideration, it seems to me that every one of the stocks mentioned in '97 or '98 and bought by three different posters on this thread has been profitable. (Although it's true there weren't that many stocks-- I think about 6 or so stocks that got agreement from 3 people.) Kind of early to conclude about 1999 (the stocks may take more than a calendar year to work out), but SLOT, CYM which fit the category (3 thread buyers) have been good this year, MAXS is about holding its own, LKI --oops I see it's actually up today- higher than when it was talked/about bought by posters (mid Aug). Maybe there are others having 3 poster buys. Don't recall. Food in this section of on-sale grocery bin seems to be very tasty and safe though! Paul Senior

To: Mike 2.0 who wrote (8596)	10/12/1999 2:32:00 AM
From: Bob Rudd	Read Replies (1) \| Respond to of 78748

MIKE MOO: Every business has ups and downs, triumphs and screw-ups, is at one time adored and another hated. As value investors we tend to look for events that trigger overreactions that put decent companies into favorable price range. If this were Dec 1974, Aug 1982, or Oct 1987, virtually all companies would be in that favorable range. But after an historic bull run that has valuations of many companies discounting Nirvana, it takes a negative event to drive the price to bargain range. If you had bought Coke in the early 80's after the New Coke fiasco [arguably the dumbest marketing move ever made because it put at risk what would come to be recognized as the most valuable brand franchise in the world], you would have made out rather well. If you had bought in mid 98, when everyone knew it was the best managed company on the planet, you'd have taken a bath. Your point about catching investment salmonella with bargain buys is well taken, though, because the internet has the potential to permanently alter business models. Thus, in previously stable areas where you could have bought on a bad quarter, it's critical to ask if some discontinuous innovation might be about to take over the market. An important key to being successful in investing is to choose a style that fits. I like to shop for bargains at the grocery store and the stock market so value investing suits me fine, but others, not keen on bargain hunting, will be more successful buying growth or momentum. Do what fits you. bob