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

To: Paul Senior who wrote (27862)	8/22/2007 8:19:59 PM
From: E_K_S	Read Replies (1) \| Respond to of 78753

I guess I was not clear on the cigar butt question. I understood that this type of position is established from a full position that has become fully valued. One sells this position keeping a small number of shares identified as the "cigar butt". At some point in the future (ie two years), the rest of the position (ie cigar butt) is sold. I just wondered if some time in the future Graham ever upped his remaining small number of shares (the cigar butt) into a full position again because he may have under estimated the "true" value of the company. I have found that sometimes I sell too early but keep a small number of shares only to up my position again in the future. This is because of (1) new company events or (2) there is continued strong sector growth that leads me to think that the company is under valued. The best strategy would have been to just not sell the original position, but sometimes I am wrong. By keeping a few shares in the portfolio (the cigar butt), I continue to monitor the stock and if the company becomes under valued, I up my position. It just points out that the "sell" proposition is not always straight forward. I know that I will never get it perfect, but it's establishing a discipline for an exit strategy w/o leaving too much money on the table. EKS