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

To: Spekulatius who wrote (51285)	4/10/2013 11:48:24 PM
From: Jurgis Bekepuris	Respond to of 78618

I agree with you about L. Even with Brooklyn investor's bullish writeup, I decided not to buy. (Although it's possible that L tracking position might be as good or as bad as BH tracking position :)). You bring up an interesting and important question: should we invest into value-investor-run companies (BRK, MKL, FRFHF, GLRE, BH, L) now that stocks are somewhat expensive and they might not be able to do good deals with their cash? Well, on one hand there is a risk that they will have subpar returns because they cannot use the cash. And also a risk that they may buy something for too much money (like BRK buying Heinz - btw, I am reading "Snowball" again and presumably this is not the first time Buffett overpaid). On the other hand, if stocks are expensive, perhaps these guys are the best to invest with: they won't blow the money on crappy purchases, they may buy back their own cheap shares, they might have cash to use if stocks drop, and their stock might not drop as much because of the cash cushion. :) Finally, most of these guys have returned great returns in variety of economic and market conditions, including overpriced stock markets. So perhaps investing in them is not so bad. This is part of the reason why I have bought MKL, BRK, GLRE (only small tracking position of GLRE) recently. It is also part of the reason why I hold FRFHF. The market is not cheap and I don't see too many buys in it. But holding these value-investor companies allows me to be in the market and yet to be protected somewhat if the market dives. It's not as good as cash for a market drop, but better than cash if market does not drop. Since market is not IMHO hugely overpriced yet, I think this is good enough solution for me. The only drawback is that I did not buy enough BRK/MKL at lower prices. :)