re: LTB&H and the GG
T M-H,
<< if the markets are near multiyear low, wouldn't this be a great time to be buying? ... if our shared focus is genuinely long term, then making the "mistake" of buying while there is still 10-20% left to go to the deepest bottom should be irrelevant if the investment is going to have gone up 300% by the time we have reached the "long term". >>
Your question is a good one, and although I don't know the answer, I'll comment.
I won't speak for others, but I remain essentially a LTB&H investor, although as I've noted before, I typically move 20% of my equity portfolio (which is all in tax-deferred investment vehicles and primarily consists of gorillas and kings) to cash between Christmas and January end and fully invest in the best possible candidates (not necessarily gorillas and kings) by October end.
Last fall I had planned to make that 20%, 50%. I was, however, a bit greedy and GTC limit sells I had placed on "questionable" tech portfolio holds (not necessarily gorillas and kings) missed by a whisker before the Nasdaq hastily retreated from the fall rally. As a consequence I still hold PMCS, ITWO, JNPR, (and too much JDSU) at a fraction of what they were worth at year end.
I remain confident in my gorillas and kings (CSCO, QCOM, NOK , MSFT, INTC, SEBL, ORCL, NTAP, EMC) and I fully expect them to rebound sharper and stronger when the economy takes a turn for the better and the Nasdaq bull returns (whenever that may be) than many other tech stocks that are not market leaders in their respective market segments.
Right now the value of my "cash equivalents" outside of my tax-deferred portfolios is 2x my equity investments, and I'm uncomfortable with that much in cash equivalents as I remain bullish on investing in equities long haul rather than alternatives (although some portion will be invested in bonds).
In the interest of portfolio balance however, if and when I invest some portion of these "cash equivalents" in equities the investments will be made in non-tech (using a criteria similar to the Motley Fool's "Rule Maker") or smaller-cap tech stocks along the lines of those studied by the RTW group.
I might add that this is the last day to subscribe to RTW at $99 as opposed to $300. I also should add that I just started reading the NPI thread a month or so ago (don't have time to contribute). Yesterday I started printing out and reading the body of work contained in the RTW reports starting with issue 1. It is an exceptionally good body of work and if a tech-investor already owns a copy of the RFM, and has already subscribed to SI and TMF, I can't think of a better place to "invest" $99.
I have also started to read "The Secret Code of the Superior Investor: How to Be a Long-Term Winner in a Short-Term World" by James K. Glassman which published in January:
amazon.com
At the heart of Glassman's "secret code" is the belief that stocks are the best long-term bet there is; the trick is finding solid companies to invest in and then sticking with those companies through thick and thin. This book is for anyone (especially those getting over the recent technology boom and bust) who is looking for a reliable and balanced approach to managing a portfolio of stocks and bonds.
At $17.50 the book is a bargain.
[Whoops, I've started to wander]
<< Those of us who need to see the tornado before making the investment probably do need to wait until the upswing begins since few tornados of that type are likely to happen when the economy as a whole is having trouble growing, but I don't think that this means that we couldn't find and vet the technology and market so that we could raise a tornado watch. >>
That is, IMO, a most appropriate question, and I believe that is the intended purpose of this thread.
I think this is a very valuable excercise, PARTICULARLY at this time of depressed tech valuations - which some would argue are still too high - wisdom I question to some degree, and at least in some cases.
It has been quite awhile since we have seen a Project Hunt Report, and I hope we see some, both on new portfolio candidates, and reexamination of some old "supposed" Gorillas and Kings.
I myself am not averse to buying slightly ahead of the tornado (it sure worked for me with Qualcomm) ... and I'm not inclined to wait around for all my threadmates to reach consensus on whether WidgetInc. is a gorilla or king, or whether a tornado REALLY exists, but I do believe that Moore's advice is sound, and spotting a tornado is not easy, which is why we should get back to a concerted effort to "vet the technology and market so that we could raise a tornado watch".
Many of us have shunned the "basket approach", but most of us started investing in gorillas and kings (sometimes long before the tornado) in a different economic climate. Perhaps we shouldn't have shunned it. Perhaps we should reexamine that approach for the future.
<< And, those that are comfortable getting in earlier, shouldn't they actually be buying somewhere in here? >>
My personal opinion is yes and particularly in market leaders - the silverbacks who are on Main Street, or profitable "legitimate" Kings on Main Street, who have solid balance sheets - but who are potentially participants in upcoming tornados.
We have talked about picking entrance points and exit strategies here before.
Anybody that is light equities, or light tech, and fretted about GorillaABC's or KingXYZ's valuation a few years back could do worse than start to consider picking off some extant market leaders who are at 3 or 4 year lows, sometime before the Nasdaq starts its typical (certainly not assured) fall rally. I think most of us agree that picking an absolute bottom is nigh impossible.
In the interim, as Jurges points out, the "Buffetology" and "Value investing" threads are available to all of us - but this thread should stick to evaluating G&K Portfolio Candidates
All JMHO & FWIW, and my apologies for rambling and long paragraphs.
- Eric - |
