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

To: Madharry who wrote (21146)	4/19/2005 10:35:17 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78954

OT: Madharry. If I had one stock I preferred over all others, I'd be plenty scared. Largest buy position amount would be maybe 5% with that position likely lagged into over time. As regards holding vs. buying, in some smaller portfolios, I've been willing to hold all of a position even as that one position has increased to maybe about 14% of the portfolio's value. At some point though, I will scare myself into believing that it's prudent to trim and move on. (Which differs from the Buffett, et. al. approach which says - if you've picked the right stock, why sell? Or -- even if the stock is moderately overvalued, if it's a good moat stock with good future, again - such stocks are hard to find, and so once more - why sell?) Perhaps it's a matter of purpose and goals. I am not looking for one stock upon which to place my future - I don't need a do or die bet. It's not necessary for me to find the one stock, the profit from which will enable a lifestyle change for me. I see investing as a long term process, so I don't feel I need to make a big bet on any one particular stock. Plus, given that I am wrong a lot, especially where I initially believed I was so right, I am leery of big bets. Jmo and my nature. Others will differ. ------------- How about yourself?

To: Madharry who wrote (21146)	4/20/2005 11:37:21 AM
From: Kevyn Collins-Thompson	Respond to of 78954

If I do find an outstanding value, which happens very rarely, I buy as much as I can. Otherwise, I don't buy. When I've found a company that I've thoroughly researched in a business I understand, at a low price against my valuation model, the risk factor is small and I feel confident in the purchase. I mean, why put the money somewhere worse? ;-) In real terms, this can be up to 25% of my portfolio, although it's typically around 10%. It won't ever be 100% because I do reserve about 25% cash for when the market tanks and I want to buy, and of course I have existing investments I don't want to sell. In my experience, taking meaningful positions in a company forces me to do my homework and also forces me to play for as large a margin of safety as possible, e.g. waiting patiently for a good price. There is a broad diversity component in my decision-making across economic sectors. This approach isn't for everyone naturally, but if I didn't do it, the next best thing in my opinion would be the other extreme, e.g. a cheap index fund.