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

To: Shane M who wrote (2504)	6/2/2000 9:37:00 PM
From: Freedom Fighter	Read Replies (3) \| Respond to of 4690

Shane, >>Some, especially thinly traded issues, just seem to sit like a rock then come to life and find a new plateau in the course of an upredictable week or two. Some of these I never know what really makes the stock move. It just happens on no real news or change in the business.<< I'm sitting on 2 stocks like that right now. Their earnings keep exceeding my expectations, I'm fairly certain about the values because the companies are rather simple, yet they just sit there day after day. I'm fairly certain that if they were blue chip types or part of the S&P500 they would be rallying like crazy on the earnings news and sales growth that has occurred. The reason it has tested my patience a little is that I have bypassed several very marginal blue chip values that immediately rallied back because I preferred to be in the huge value. So far that means it has cost me money. If I can buy a stock that rallies 30% in a few months and then put the proceeds into another stock that rallies 30% in a few months that can work out better than sitting on one that takes forever to realize a greater spread between its price and value. That's why I asked the question about the time it takes on average to realize the value based on other investors' experience. I'm new to the small cap/thinly traded stock game. I'm wondering if there are any lessons to be learned here other than patience. Wayne

To: Shane M who wrote (2504)	6/2/2000 10:25:00 PM
From: James Clarke	Respond to of 4690

I was going to respond to this question, but Shane already did much better than I would have. I'd add the following. I think Ben Graham answered this question indirectly when he said when you see a dollar bill trading for 60 cents, just buy it. You might not know exactly how it will work out, but if you're right it will, if you're wrong it won't. I think many investors now are obscessed with catalysts and timing - I prefer to spend my time looking for extreme fundamentals and I find the timing and catalysts usually take care of themselves. I get into heated arguments with my colleagues all the time when I pitch a stock trading for say 30 and analyze that the underlying business is worth at least 50. "Why is it going to go up?" they ask. "Because its worth at least 50." Thats enough for me. Its not enough for a portfolio manager being judged quarterly.