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

To: MCsweet who wrote (18903)	3/18/2004 5:23:31 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78491

>Ask yourself if you didn't have a position would >you be comfortable buying the security at these levels? >If not, then you should think about selling at least > some of your position (say perhaps 1/2). I disagree with this approach for the following reason. There is a rather large "hold" zone in between "buy" and "sell" zones. So there is no implication that if I would not buy something, I should sell it. For example, I buy at >15% expected annual return, sell at <6-7% expected annual return and hoooooold in between. If I used your suggestion, I should either sell or buy when I see expected 10-13% annual return - I don't think either of these are attractive to me. Buying in the hold zone implies too much risk for too little return. Selling implies too much left on the table, commissions, taxes, costs of searching for alternative investments, etc. Also your suggestion implies that if you buy just below X and sell immediately above X (whatever X is: PE, growth, 75%of book value, etc.) then you get very very little gain because you bought just under X and sold just over X. Jurgis

To: MCsweet who wrote (18903)	3/18/2004 6:29:44 PM
From: Madharry	Read Replies (4) \| Respond to of 78491

It seems to me that there are potentially lots of strategies that work. and if someone is really good at quantifying the risks and expected rate of returns well and good. Unfortunately the information available to most outside investors is pretty imperfect. I have lost money in the past on frauds- channel stuffing, unanticipated massive cancelling of orders, fraud, etc. Most of my losses could have been avoided had i followed arbitrary technical signals to reduce my position. The other area of large losses was to buy into relative valuations as opposed to absolute valuations. This worked in early 2000 but not after that. Right now I am in the camp of buying low, selling some if the stock no long looks like a bargain and holding the rest until techincals indicate its time to sell. Unfortunately its not easy to sell a stock after it has dropped 25%, when there is no available reason to justify such a decline. The other area of error is was not to pick up low lying fruit when available. Sometimes prices get so low on stocks that my gut tells me its time to buy some, no matter what the fundamentals look like- and probably I am right 80% of the time-but i dont often enough pull the trigger because of some other investment that i can take a more logical stand on-examples of this were Phillip Morris at 18 , TransOcean at 18, American Airlines at about $1.50. I expect that a couple of years from now i will be saying the same thing about BMY merck and sgp. oh well

To: MCsweet who wrote (18903)	3/19/2004 7:57:09 AM
From: TimbaBear	Read Replies (3) \| Respond to of 78491

Here's an idea about selling. Ask yourself if you didn't have a position would you be comfortable buying the security at these levels? If not, then you should think about selling at least some of your position (say perhaps 1/2). This system sometimes works for me as a reality check of sorts. However, there have been times when I have not been comfortable adding to a position but felt the time was not right to sell. An example (that seems to happen with some regularity): I have a choice of seizing a perceived opportunity in a new-to-my-portfolio company that is clearly underpriced currently or, alternatively, adding to my position in a company that has moved up out of my definition of being underpriced, but the price is still increasing and all other barometers are still positive (still executing on plan, still as profitable, etc.) In the above dilemma, I may be able to quantify how underpriced the first choice appears to be, but have no reliable manner of determining how high the price of the existing position might be taken. I would take on the new position and continue to hold and watch the existing one. Timba