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

To: Elroy who wrote (54700)	1/3/2015 8:25:45 PM
From: Paul Senior	2 Recommendations Recommended By Jurgis Bekepuris Mattyice Read Replies (2) \| Respond to of 78625

"you think some of them are (right now!!) better than others." My best investments (stocks gaining the most percentage-wise and/or dollar-wise) have never been the one's I apriori believed to be the best. My best picks have surprised me. Since I'm looking at stocks most days, I view the development of best picks to be emergent. If I had 30% of my funds in one stock and the next day I find something I like better (e.g. something like a one-time event that has temporarily cratered a heretofore solid stock), what would I do? Drop the 30% holding? Sell other stocks? Ignore this newest stock? Put 30% into each of two stocks? Yes, I have several positions which I believe are better than others right now. Generally, I'd say that if I am putting money into them initially or adding to them, then those are the ones I like right now (vs. anything else that I didn't buy or add to). Which often means my latest purchases are my favorites. I can guess based on my past history though, that my recent buys/adds (of Penske Auto -- (PAG) -- can't lose - you get a great entrepreneur, company profits from sales/repair/ and those warranty recalls; Pacific Ethanol --can't lose --more driving means more ethanol consumption; AMZN - can't lose -- company will trudge through with new products/services and stock boom when they decide to focus on profits; EWY -- can't lose - you get Samsung and Hyundai at a relatively low price) -- none of these will turn out to be my best performers. They may be average or losers. Take a small cap stock that you believe you know well. It declines the "40% or something". Perhaps it's declined because the buyers at the margin have been selling and depressing the price. A small cap stock might not have many analysts following it. Perhaps it's the insiders (suppliers/employees/customers) who are selling. You would be betting large that you know more than they do about the company and its prospects. If it's a large cap stock we're talking abut, then you are betting that you know more about the company and its prospects than the media pundits and analysts who are putting out negative articles about the company. Certainly that's possible to bet against the crowd and be right. But repeatedly? At 30% holding, you can be right many successive times then lose a lot with one wrong move. (Possible though, that we might have to be talking timeframes here -- people sell/depress stocks because their holding period is not more than a year or so. If the investor's timeframe is 5-10 years or more -- waiting for a change in company fortunes or recovery -- that may work. I myself would not like to tie up 30% of my portfolio on a bet on one stock for years waiting for a payoff.) ======= People will do what they believe works well for them. If it's holding one or a few stocks, and that has worked, so be it. I try to make my point which is that the opinion of people seems to be that if one has a large and diversified portfolio -- a lot of stocks--, then by some law -- law of averages? law of large numbers?-- it must follow that the person will get average results. My experience has been (until two years ago), that this is not so. Searching among the many thousands of stocks for good growth stocks, good value stocks - buying them, sometimes adding to them, sometimes culling them -- that has(had) enabled me to keep up with and often beat commonly used indices.