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

To: Madharry who wrote (37901)	5/15/2010 1:04:43 PM
From: Dale Baker	Respond to of 78671

Perhaps you can tell us more about the mistakes you made, and we can address how to avoid those. Describing due diligence methodology in detail is a tall order.

To: Madharry who wrote (37901)	5/15/2010 2:40:46 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78671

Yes, more details about this might be helpful, Madharry. You say you made two bad mistakes this week, because you didn't do enough dd. By bad mistakes, that would mean you lost money, I presume? So you bought two stocks, they went down in value quickly after the purchases, you looked closer and realized you didn't see the something that would cause the stocks to fall further. Something that you could have anticipated if you had done more dd beforehand? Two stocks both dropping suddenly for a specific reason--- I have to assume you are looking at controversial stocks, maybe trying to catch falling knife type stuff? One thing is if you post your picks here or maybe on SI's stock-specific threads before or after you buy, and ask for opinions on them, sometimes people will reply and give an insight or observation or additional dd that can influence your decision -- possibly prevent you from incurring losses. Just my experience.

To: Madharry who wrote (37901)	5/16/2010 3:12:16 PM
From: Grantcw	1 Recommendation Respond to of 78671

Hello Madharry, Well, I realize we're talking generalities here, but one thing that helps me is to generally have the first position I take in a given stock be pretty small. More of a tracking position. For me, that would be something ~ 1% of my portfolio. At this point, I'd have to have enough info for me to think that the stock could substantially appreciate over the next year. Therefore, without a position I have fear that I'm going to miss gains. But, I don't want to take a position of too large of a size either because I may not know all of the issues surrounding the stock. So, I take a position that is small, but enough to affect my portfolio if the stock would make a big run, but where I'm almost hoping that the stock goes down in the next 1-6 months so I could have a chance to buy at a better price assuming I don't get negative information about the stock in the meantime. Once I have this tracking position, and I'm almost indifferent as to whether the stock goes up or down in the short-term, then I can pay more attention to the stock to see if I should add. I think the tougher question is to decide when to add and commit more funds. Sometimes I do this after a few months, sometimes after a year or so (in the case of FVE recently, for example). I guess I basically just need to feel that the stock is still seriously undervalued and I need to capitalize on that by adding. Not sure if this helps, but just my two cents. cwillyg