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

To: Jurgis Bekepuris who wrote (44551)	9/25/2011 3:36:37 PM
From: Spekulatius	Read Replies (1) \| Respond to of 78735

re CAT and IBM during the great depression- IBM survived and prospered because Watson kept the factories running building up inventory. With his huge inventory of tabulator machines IBM was able to bit on the huge newly instated social security contract that required processing power. CAT was able to keep themselves afloat selling AG machines to the Soviet Union. The Soviet union was reorganizing their farming into huge collective farm and CAT was able to supply them with big machines that they wanted. Looks to me that both were more lucky then smart, or at least they know how to grasp an opportunity under very adverse circumstances. Still CAT revenues went from 50M$+ to 13M$+ If someone really believes that a great recession may come, picking winners will be futile, the thing to do is so short the indices.

To: Jurgis Bekepuris who wrote (44551)	9/25/2011 4:15:05 PM
From: Paul Senior	1 Recommendation Read Replies (1) \| Respond to of 78735

I might have a different opinion. "...Ken's repeatedly stressed advice only to apply PSRs to Super Companies". Otoh, he wrote an entire chapter on "Applying Price Sales Ratios to Nonsuper Stocks", In my copy of the book, I highlight p. 82 and p.88 for his rules. "PSR currently does not work well because we have been in a high ROE/margin environment for a long time." I use PSR. All the time. Currently it does not work. My explanation for why it doesn't work now, is that there is nothing that works now. Everything is correlated and everything is down.