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

To: Paul Senior who wrote (17202)	6/11/2003 12:02:26 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78748

Paul, I object not to avoids, but to - IMHO - 20/20 Monday morning quaterbacking and simplistic point-of-view. There were hundreds of stocks in 2000 that had zero business and zero business perspectives. Somehow you don't talk about avoiding and shorting Pets.com and Iselldollarforninetycents.com. Instead you take a view that such established companies with near monopoly earnings power as Intel, Microsoft, Oracle, Cisco and others are avoids and shorts. I cannot agree with this view since it implies that high ROE companies are necessarily overvalued. Some of G&K crowd said that G&Ks are always undervalued. You say that they are always overvalued. I disagree with both. You're sorry you did not short in 2000. If you wanted to short G&Ks you should think you are lucky you did not short them in 1996-1998 - I heard sentiments similar to yours then too. Jurgis

To: Paul Senior who wrote (17202)	6/13/2003 11:57:32 PM
From: James Clarke	Read Replies (1) \| Respond to of 78748

whoever asked that question about "what do you avoid regardless" produced some great thoughts from the thread. I read those and they sound just like my list of things that are red flags (Dallas and Florida HQ, yeah, even thats on my list) but I have to kind of chuckle because every one of them sounds like something I avoid but then I remember a big winner I owned or own that had that characteristic. My biggest winners over the last three years since I've been investing an institutional portfolio have almost all had some characteristic that makes them look yucky even to other value investors. Not to say that I don't reject 9 out of 10 that have those kinds of patterns, maybe 19 out of 20. But if I rejected them outright I'd have missed most of my biggest winners, which were far from "clean". In many of these cases the reason they were just stupid cheap was because they had some characteristics that made even smart value investors stop after 30 seconds. So be careful generalizing when every situation is a one-off company at a specific price. There's a price for everything thats understandable, and a lot of tainted securities are very clearly understandable though they are tainted, so you apply the appropriate discount. Something like FRE is simply not understandable to me so I wouldn't even spend the time to look at it one way or the other. Buffett says there are no called strikes, which is one way to look at investing which is certainly a great strategy if you know what the pitch down the center of the plate looks like. I think I'd say that you've got to look very closely at every pitch too because sometimes that pitch down the center of the plate looks way outside until it breaks right over the plate. If you really see the spin on the ball you can deduce where its going. Did I stretch that metaphor too far?