Thought I might jump in and add a few observations.
As a frequent surfer and sporadic poster, I have a
tendency to side with UF on this one recognizing fully
that no single investment strategy or thesis fits all. When Honest Abe
said, "you can't please all the people all the time..." , he really could
have referred to the myriad of investment strategies that
gurus have chosen to foster upon investors during our recently deceased
Battle of Bull Run. (I would love to see a total of investment threads and websites on the Net).
Just as there is no ironclad rule in picking winners at the racetrack (eat
your heart out Andy Beyer), there is also no ironclad formula in terms of investing
strategy.
In my now 21st year on the Street, all types of investors have crossed my path.
Short term traders, ltb&hers, shorters, option traders, covered writers ....I pretty much have, both for better and for worse, seen and dealt with them all.
The most successful, over the long haul, have tended to be the ltbhers with little or no margin. My opinion only of course.
I have seen traders win huge sums short term both on the long and short side. I have seen the same folks
lose huge sums as well. I have seen daytraders get on rolls that would have any AC craps table rockin and rollin.
And I have seen many short term trader's holding pages tossed in the circular file as the Great Liquidator comes to settle the ultimate margin call. I am, by no means, suggesting that one cannot be successful operating in such a fashion. I am saying, from my experiences, that the ltbhers have made the most money over time.
The difference between today and 1980 ( my indoctrination into the biz) is quite large yet quite small. As I often tell clients, back in 1980, only one or two shows (Louis R and a 1/2 hr. nitely Biz report) were the only investment shows. LouR. was on Friday nights and we all hustled home from Happy Hour to hear why every stock we bought went down. Of course, the DOW was around 1000, rates were double digit plus and a Joe Granville induced Blue Monday had people jumping off bridges. Of course, in that climate, nary a stock save energy and gold went up. ASA and Homestake were the Junipers and Ciscos. Rocky Mountain overthrust drillers and oil shale converters were the dot.coms. Limited Partnerships, not IPO's, were the source of $$$. So, the names may be different but a lot of the psychology was the same. (Believe me, o&g drilling was a mania ----a local fella here in NE Pa. had a chain of successful pizzerias..mall locations...the whole nine yards...makin millions.....sold them all, moved to Texas and bought rigs...LOL...I had forgotten that one....lost it all I think.... My manager literally tore the ticker tape off the office wall in July 1982 proclaiming the "market was dead" and in his hand he was waving an offering memorandum for a leveraged oil and gas private placement.....the Hughes Tool Rig Count {a major economic # at that time} proceeded to go from 4100 to 700 and Dow from 1000 to 12,000 ....LOL...now that was top and bottom calling at its finest..).
The very first stock I sold a client was Household Int'l , the second was Warner Lambert. The client owns them today (PFE instead of WLA) ...a lot more shares worth a rather large fortune. Held them through the 84 downturn, the 87 crash, the 89 mini-crash and 90-91 recession. Through the Gulf War etc. etc. Whenever, I asked him why, he always said in his best Buffetonian, "they are great franchises...I only want to own great franchises...". You get my drift.
I think UF and his GG crew have the right idea. You buy and hold the great franchises (technology or otherwise) and, over time, they prevail. In fact, I think the beloved FM (the field manual for you non-cross lurkers), suggests you should add to the true Gorilla companies on weakness. Of course, the GG thread nobly tracks undiscovered primates but, the essence of the strategy is to do exactly what UF suggests, buy the established leaders when the market is underestimating the size, scope and length of their competitive advantage. Time and performance will take care of price.
If we then did, as TFM suggests, and check the health our companies each quarter rather than each second, we might be better off. TFM also suggests you ignore the day to day ramblings of economists (defined as the only professional who earns a lot of money for constantly being wrong), prognosticators, gurus etc. etc. These truly can be distractions for long haul investors......
Again, I am certain many will disagree as is their privilege. I do a bit of trading myself...but I try to hold my cores (the great franchises ) and trade the risk portion of my capital...Just some observations based on one fellow's perspective from deep inside the trenches.
Regards
Bob |
