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

To: Paul Senior who wrote (11307)	10/18/2000 12:28:29 AM
From: jeffbas	Respond to of 78615

Paul, the problem as I see it is that the more the market drops the more we will have a negative wealth effect with unpredictably adverse effects on the economy, which may make what looks like good value now not so hot if earnings evaporate. My wife tells me that it is worth it if people feel so grumpy on Election Day that they gore Gore. Small consolation.

To: Paul Senior who wrote (11307)	10/18/2000 12:30:02 AM
From: James Clarke	Read Replies (1) \| Respond to of 78615

Allen and Paul lead me to express what I'm thinking about and have been thinking about for a while. I am fully invested for the first time in a while. There are just too many stocks out there 30% below my price not to be there. At the same time, I have to keep reminding myself that the real once in a generation bear markets, which tend to follow the once in a generation bull markets, last a long time. Five years, ten years, twenty years even. Company by company I can buy stocks, but I don't feel like I need to call bottoms now. If the historical pattern fits, the dominos are finally falling and will continue to fall for a long time. The economy hasn't broken yet - it will. Everybody is still convinced stocks are the only way to go - that will change too. We are still early in the denial stage - everybody who bought Microsoft at 110 still thinks its going to come back if they are patient (meaning a year). To follow will be the anger stage, then the "I will never buy a stock again" stage, and the final stage where we should be at our best. I remember I think it was Seth Klarman's description of what life was like for a value investor in the worst (best?) of the 1970s bear market. He described pacing around the Tiffany building on Fifth Avenue and measuring the acreage, calculating the the entire franchise at Tiffany was trading for the value of the land under this one owned building. We're not there yet. So why am I fully invested? Because we are kind of there with a number of stocks, and I think those are the ones I own (don't I always?). But more importantly, because I am 31 years old and have positive savings every month to accumulate. I think I have saved less than 1/10 as much as I will have accumulated ten years from now. There could be nothing better for my long-term net worth than an ten year bear market, even if it takes everything I own now down 50% more. This is not a market call - I have learned not to call the short term - the next move may very well be up. I have learned to go company by company (I always knew that, but sometimes forgot and Paul Senior would beat the crap out of me and the first time I got to gloat and the second time I sold weeks before everything I sold went up 50%), but I can't ignore history. History doesn't repeat, but it rhymes (-Mark Twain), and if this history rhymes we'll be watching news reports in 2010 cheering that the Dow broke 10,000 and the Nasdaq broke 3000. The next ten years are pretty clear to me. That doesn't mean sell - smart value investors made a lot of money in the 70s, and if they held onto the positions they accumulated they made a fortune later. That's my thinking now (but professionally I've still got to think of how to beat some random index of stocks in the next quarter - you sure you want a job in this industry?) Be happy, but be careful Jim