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

To: IndependentValue who wrote (52037)	8/8/2013 7:34:18 PM
From: Paul Senior	2 Recommendations Recommended By Jurgis Bekepuris research1234 Respond to of 78673

I have a much different view from you, IndependentValue. First, I maintain a broad portfolio, at least 200 stocks. Given that, I must look at stocks differently from you: ...all investors should be doing their own homework That's what they say. I have a different opinion. I wish I learned in high school: it's much better to let somebody else do the homework for you. I like to let the guys who drill-down and carefully consider various aspects of the company, do the homework. You all do it so much better than I do -g- is calculating ROIC really that much of an additional effort if one is sorting through 10-Ks for a number of years anyway Yes. For me. So I rarely sort through the financials of 10K's for a company I'm considering as a prospect, or for a company I already own. I also think that ROE is quite open to manipulation, more so than ROIC, given that it relies on net income and net assets (ie. book value of equity), which can both reflect all sort of accounting trickery that mask economic reality I don't generally don't consider or worry about manipulation. I'm looking at roe going back 5-10 years, and I'm comparing current roe to the past and current p/e to past, and growth in stated bv. I figure I'll get stung once in a while -- and I am occasionally -- with phony bookkeeping/crooked management. Since most of my positions are small compared to portfolio size, it's painful when it happens, but not portfolio threatening. I play a numbers game -- wanting my winners in the portfolio to win more than my losers lose. == I don't believe that the more research one does translates to the more success one has. I guess it does mean the more you know about the company and its business, the more confident you can be, and the larger position you can confidently buy and hold. Otoh, there when one stock does blow up, it's quite the hit. And we've seen many fund managers who run concentrated portfolios get hit/blind-sided and fail to outdo funds that are more diversified. Basically, I argue for having a diversified portfolio and some sort of consistent method or methods for picking stocks, because that's what I aim to do in value investing. Of course, other people will do what they believe they should; and their methods/strategy-- far different from mine, may be right for them.