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

To: Paul Senior who wrote (55927)	8/22/2015 12:15:21 AM
From: E_K_S	Respond to of 78655

I increased my cash position today to over 7%, the highest in many years (not quite the 2009 level). I peeled off 20% positions in oils that I bought in 2006 and 2008 all booking some very nice capital gains. Used those gains to offset some losses in high priced shares of other stocks that I sold (a few MLPs and secondary E&P's). I definitely am not out of the market but am trimming the portfolio to build up my cash reserves so I can go value buying in the next week/months. My main goal other than buying quality stocks at value prices is to have the portfolio(s) generate dividend income. The two stocks I bought this week were not dividend payers and/or value buys but attractive to me for their GARP attributes. Opko Health, Inc. (NYSE: OPK) Good Times Restaurants Inc. (NASDAQ: GTIM) The plan is to continue to trim the portfolio (selling high priced shares reducing my avg cost basis) and building up my cash position so I will have plenty of dry powder to deploy when the bargains present themselves. Sometimes these corrections continue a bit longer than expected and selling begets selling as short term fund mangers exit the market amplifying the overall correction. Not sure what Grahm would be doing in this market w/ all the QE's and historical low interest rates, but Buffet seems to be a buyer for that exact reason (ie low rates). Good bargain hunting EKS

To: Paul Senior who wrote (55927)	8/22/2015 1:03:00 PM
From: Ford Law	2 Recommendations Recommended By Jurgis Bekepuris sjemmeri Read Replies (1) \| Respond to of 78655

This discussion reminds me of a particular paragraph in Intelligent Investor: "But note this important fact: The true investor scarcely ever is forced to sell his shares, and at all other times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgment." Based on the paragraph above and the points already made on portfolio allocation, it's a bit absurd to call someone who is holding mostly cash and prophesying that the markets will continue to decline until after the elections the "truest Grahamian" among us. The markets could absolutely decline until then and if holding all cash is what you have to do to sleep at night, there is nothing wrong with that. But let's not get carried away with market timing and predictions. And let's not blur the lines of value investing and Grahamian principles. As for Mike Burry, I am reminded of a quote from '01: "So, I will go on record right now as saying that this is a time of tremendous uncertainty about market direction - but no more so than at any time in the past. I continue to believe the prudent view is no market view. Rather, I will remain content in the certainty that popular predictions are less likely to come to pass than is believed and the absurd individual stock values will come along every once in a while regardless of what the market does."

To: Paul Senior who wrote (55927)	8/22/2015 1:22:24 PM
From: Graham Osborn	Read Replies (1) \| Respond to of 78655

Paul, I think we agree on a lot of things although perhaps draw from different schools of thought. Just 2 comments: 1. On the market PE, I don't really view it as representative of the growth category of stocks you refer to. I think of the market PE as more of an indicator of "probable magnitude of significant sell off at some point in the future." But growth stocks (particularly of the Ken Fisher category) aren't really represented well by PEs anyway. In fact, there were a lot of stocks with low PEs in the 20s, 70s, and 90s owing to fat profit margins, leveraged profits and the generous accounting that seems to accompany these heady times. So I'm not saying it's a fabulous indicator, and definitely not that a PE is a reliable measure for a growth stock, but just that the PE 5 etc were Graham and Dodd indicators of market level. Whether Graham and Newman had a specific algorithm related to this metric I doubt; I'm just going on historical comments Graham made to Buffett and his partners at various times. On the growth stocks I'm looking at PSR or EV/ Rev, and most equities (apart from Lazarus-type microcaps) are well above PSR 0.75 (I think STRL was an exception). So they fail K Fisher's growth stock criteria as well. What Buffett is doing seems strategically weighted to me, and in any case I find it difficult to swim like a whale as a minnow. When I look to emulate Buffett, I look at what he was doing when his capital was comparable to mine as a small investor. And yes, growth stocks like GEICO were a big part even then. 2. I think fundamental shorting (with or without TA) has gained its place in value investing thanks to the efforts of Chanos, Einhorn, Ackman, Burry, and many others whom are either self recognized or consensus labelled value investors. While pure technical shorts would not have a place here, cases of fundamental overvaluation would seem appropriate. Only a fraction of the plays here fit "the Ben Graham tradition." And the number of regulars here is small enough as it is.. Graham