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

To: Jurgis Bekepuris who wrote (32114)	9/21/2008 12:16:05 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78470

Just to explain my goals of this WFC and shorting discussion. First, I tried maybe understand a bit more what shorting works and what does not. Also whether it is possible to be successful short as a value investor and how. (This has been discussed previously on this board with no good conclusion IMHO). I have some ideas about this but so far I have always felt that I did not have a good strategy on what and when to short to be successful. I don't think this has changed. Another thing that I was looking at is going outside the limits of your investment approach. For me, this has been successful when I planned to make such "excursion" an additional approach that I use constantly and I have a strategy for. It has been a disaster when I just tried to do "something that works for others" for quick buck. The success story is how I moved into investing in below NCAV/cash/book small caps. This was something that I was not comfortable with, but now I think I understand what works in this area and how to invest using this method. The failures have been options (way back when in ~1999-2000), some (mostly international) story stocks where I had no clue how to value the stock suggested by other people. Overall story stocks seem to be very dangerous if one buys the story often not even fully understanding it. Even worse if one forgets or relaxes valuation discipline for it. There have been some washouts or near misses: homebuilders last year (although I learned a lot from the experience), Fannie Mae preferred this year - I almost bought it on very convincing story of a friend, temptation to short BSC at $5 or so when it was being taken over for $2 for "free money" (deal was revised to $10 as you know and it would have been "free loss" ;)), some materials and energy stocks this year. If I had only one thing to say to myself or any other investor, it would be that you just HAVE to follow your discipline and buy what you know and what falls into your model. Going outside the framework usually just leads to losses.