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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Dr. Id who wrote (43740)	6/21/2001 1:17:15 PM
From: Mike Buckley	Respond to of 54805

Dr. Id, We have gone on the premise that we are identifying good companies and investing for the long haul without thinking about macro economics... It depends upon how you define the term, "marcro economics." The largest macro economic I know of is that world economies and especially that of the United States have expanded over long periods of time. The periods of expansion have lasted far longer on average than the periods of contraction. (Borrowing from Bruce on that point to make me appear that I know what I'm talking about. :) Most important to me is that there is no compelling evidence that any change in those macro econnomics is in the wind. Those are pretty important macro economics in my mind, and the sort of stuff upon which LTBH is based. Isn't that what has cost most of us the huge gains that we made in the last two years (most of which are GONE)? Not necessarily. Some people used margin and other forms of leverage that maximized their losses. Some people failed to use valuation which could have minimized their losses if they choose to place great importance over such a relatively short span of a year or two. Some people simply failed to exercise discipline and implement whatever plans they might have had in place. My point is that there are a lot of ways a person could have minimized the losses experienced in the last couple of years, and none of them required an analysis of macro economics (however you define the term) or a plan to act on results of the analysis. And there are forces beyond macro economics at work that drove prices to such a high level before the precipitous decline. I think that we operate with blinders on if we continue to ignore the mistakes that we all made in the last year. I think there is a difference between ignoring mistakes and acknowledging them while deciding that given the same situation we might want to act the same way again. To use my personal situation as an example, I'm not sure I would want to do anything different if the same scenario presents itself again. That's because, not having a crystal ball, I have no reason to believe I have the powers to reliably predict that the decline of the magnitude that recently happened would happen again. All of us have the power to see what happens in the rear-view mirror, but that's not the same as using the same set of information to predict the future with any reliable degree of accuracy. Even more important is that I very seriously doubt that, had I sold some or all of my positions in late 1999, that I would be so unusually saavy as to know when to get back into the market. I'm reasonably certain that I would have paid enormous income taxes and gotten back into the market far too soon, not necessarily minimizing the losses to any significant degree. I hope you saw my answers in this folder to the questions you asked me in the CC folder. And I hope they were helpful. --Mike Buckley