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

To: jeffbas who wrote (2474)	11/15/1997 9:20:00 PM
From: john harris	Respond to of 78625

<<As I have said before on this thread (I believe) the average person should only buy index funds.>> Jeffrey: And Mr. Buffett agrees with you in his most recent letter to Berkshire shareholders.

To: jeffbas who wrote (2474)	11/15/1997 9:41:00 PM
From: Paul Senior	Read Replies (3) \| Respond to of 78625

Jeffrey Bash: Okay I can buy the index for diversification idea. But I will challenge the idea that a person cannot understand a great many companies or industries. I believe the average person can indeed follow many companies and many industries. I see no empirical or academic evidence to prove otherwise. Computers make tracking individual stocks and news thereof very easy too. Also, the older one gets, the broader one's experience with industries and companies. As I've once posted, some of these companies are like old girlfriends - they pop back into your life in very surprising ways -g-. Jeffrey, there is something not right to me about pig-in-trough investing but I just can't articulate it quite right --but I'll try -g-: I've recently bought Western Digital, LSI Logic, Fluor, and more of Applied Magnetics. I think they'll work out (higher stock price)over the next couple of years. (And given that we know that the big companies in the DD sector have been hard hit - Quantum, Seagate, and WDC - -how much exactly do we have to know to make an investment in this industry? I will defer here to Mike Burry's investment skill and just give you that Quantum is the superior investment. To me the question is should an investment be made at all - I say yes, and I figure if Quantum rises, so will WDC at some point in this very competitive business in which king of the mountain is by no means assured. So I'm comfortable with purchase of WDC at current price vs. its fundamental numbers.) And I would've bought a few more companies in other industries if their prices hadn't bounced on Fri. Then there's the arbitrage play in those 2 Canadian stocks mentioned here that I want to look at too. Next week there will be more opportunities. If I have to weigh the next purchase against these most recent and upcoming buys, I don't know how to evaluate it, because I can never be sure what the time frame is for these stocks which I now own and think are undervalued, to move to full value. Plus, my natural inclination is that the last stock I buy is the greatest stock buy, so I have to temper that by not succumbing to the idea that some of the stocks which I've owned for a while are dogs (which they probably are -g-) and should be discarded poste haste for a large position in my latest find. In my own case, a majority of my sales recently have gone on to even higher prices so my decisions to sell and move to other undervalued situations have not been so great it seems. Secondly, there's something about turnover. If a person maintains 8-10 stocks but has turnover of 100% what does that mean? Churning, trading, lack of conviction, (brilliance? -if the positions work out)? Finally, there's the issue of portfolio $ value. Maybe a young person with just $100k might want to go for 8 stocks plus an index fund, but for older and bigger $ players, putting 1/8 or 1/10 of a portfolio into one issue has much different consequences if the stock doesn't perform. JMO, Paul. It would be interesting to see how or if people change as they invest. Buffett apparently has moved from diversification to concentration. I've moved the other way ... from just a few stocks to many. Mike B. says he's moving to a few more but still concentrated. Wonder what others are doing.