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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (83919)	5/2/2007 2:12:33 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 206334

some of my best stocks dropped 80% or more from my initial buy-in sorry, bad math. i should have said "40% or more". i first bought FCX at 18 and it fell to 10. i first bought VLO at 48 (split-adjusted 12) and it fell to 24 (split-adjusted 6). i have not had the pleasure of having a "winner" which fell 80% from my buy-in, and if it did i doubt i'd have the guts to double down. Buffett would, and maybe that's "skill" (it's certainly huevos). iirc Buffett bought the Washington Post at a PE of 6. it then promptly got sliced in half, and he of course doubled down. btw, Buffett is commonly cited as "living proof" of skill (and i would like to believe he is onto something). but even Buffett did many things that worked at the whim of chance. he sat out the 73/74 bear market because he thought equities were overpriced. but overpriced compared to what? at their peak, the nifty fifty were a screaming bargain compared to today's markets. another case one might make for Buffett is a kind of creativity: he went beyond simple Graham and Dodd cheap stocks to see the value of franchises like Coke (and See's Candy, which to this day i wonder why anybody buys because their candy is crap, but there's "franchise" for you). maybe if Buffett had been 20 years younger he would have taken Starbucks private in the mid-90s. that, to me, is maybe the greatest consumer franchise since Coke. so, another way of looking at "skill" in investing is to not even pretend to equate it to a quantifiable skill, but keep it in the realm of other creative things. Buffett was able to "see" forms of value that others didn't, years (decades!) ahead of the market. if we think of investor skill in this way, i would say it does exist. but that's outside the realm of the quantifiable.