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

To: Don Earl who wrote (16192)	1/18/2003 9:30:27 PM
From: James Clarke	Read Replies (1) \| Respond to of 78744

Occasionally I will use a chart pattern to set a stop loss, but its not my style. If I would sell a company at a lower price, why not just sell it at the higher price and be done with it?

To: Don Earl who wrote (16192)	1/19/2003 7:21:12 AM
From: Paul Senior	Read Replies (1) \| Respond to of 78744

Don Earl: Perhaps we should distinguish between stocks that drop suddenly and precipitously after the issuance of adverse news, stocks that drop this way when no news is immediately forthcoming (as mrcjmoney mentioned), or stocks that just keep going down and repeatedly hit new lows. Regarding the latter: It seems to me that anybody who says that their expected timeframe for holding a stock is a few months (and where the actuality of holding is really a few weeks), that person's going to view drops in the stock during the holding period as errors to be avoided. In my case, my view is that value stocks are or can be problem stocks, and it takes some time before the managers might correct or overcome the business issues which resulted in the lower stock price. This means the timeframe for holding the stock must allow for temporary ups or downs while the business issues get resolved. (It should not be a necessary condition to add more to the position if the stock drops further in order to profit from the turnaround, but adding sometimes does add to profits, so I consider doing that.) Don Earl, your posts are paradoxical -- at least to me. Which is okay; adults live in a paradoxical world. For the fun of it, I'll just take a snippet from your last post... "If the trend is down and a stock is making new 52 week lows on a regular basis, it's because the market recognizes fundamental reasons for not owning the stock at higher prices. In other words, it's not a good value, and trying to catch a falling knife isn't value investing as far as I'm concerned, at least if the theory behind value investing is to make money." ...and tie that to your 1/10/3 post on INLD which has been in a general downtrend thusly: finance.yahoo.com You wrote, "I've mentioned Interland (INLD) a few times in the past year. (At higher prices) ... The stock closed today at the lowest level it's been since September 2001 at $1.18. For what it is, I think there's a lot of upside potential over the next several years if they even come close to executing on their business plan." From your complete post about INLD it seems that business prospects for INLD are now clearer or better than they have been, and so the stock at lows is even a better buy than before. And you are saying someone who buys or adds to their position now, and who is prepared to be in the stock for more than a few months, gets a good shot at substantial gains. Well that's exactly how I very often see value stocks (dropping after first spotting them), how I buy them (buy more at lower lows), and how long I might have to hold them. Paul Senior (aside: I'm not saying that I see INLD as value stock though!)

To: Don Earl who wrote (16192)	1/19/2003 8:34:34 AM
From: Paul Senior	Read Replies (1) \| Respond to of 78744

Don Earl: regarding Berkshire. I have currently been re-evaluating an observation I have regarding buying stocks that Mr. Buffett buys. I have stated several times that I have found no losing situation if one buys any stock that he has bought if one buys as soon as possible (when filings are reported in the media) after he buys, and if one can buy at a price equal or less than the average price reported in his filings. Just to recap: this gets complicated because some of the buys are done by his surrogates. And some of the positions have been small or odd (to me) like the dinky REITs that showed up a couple of years ago that didn't seem like "Buffett" stocks. -------------------------- At this point, I've closed out my position in GMT, a stock I've held for many years. They are primarily now a rail car leasing company. I've made some buys and sells, but always maintained a small position in the stock. Considering this and the time value of money, I'll guess overall it's not been a profitable stock for me. It's a stock that Mr. Buffett owns and a business in which he's very knowledgeable. GMT pays a good dividend (which may not be sustainable). Its cost of funds (an important aspect for lessors) is higher than its main competitors because it's a smaller company (GE being #1). It's possible that GMT would be an acquisition for BRK because access to lower cost monies (BRK float) would improve GMT's performance. The questions I have asked myself are: how long am I going to be in this stock (GMT), and what am I expecting. I just don't see the upside potential. I do see a downside to current price, but if the stock broke new lows, I wouldn't be surprised to see a BRK buyout. In any case, this is one instance where a "Buffett" stock has not worked out for me. And where I suspect I have given it enough time - years - to deliver results. (I've had this stock before I knew Buffett owned it, and I may or may not have paid higher prices for my initial positions than he did. So he could be showing an overall profit on his position.) Paul Senior