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

To: Paul Senior who wrote (56094)	9/25/2015 3:26:59 PM
From: Jurgis Bekepuris	Read Replies (2) \| Respond to of 78821

Well, one side effect of deep DD is that you might spend a week researching a company, write a dissertation on it and then realize it's not worth investing into. I understand that's not what you are saying about SA articles, but it does happen. So you could see a long article about a company and the conclusion "no buy". I believe most of people on CoBF do invest, so I don't think that applies to them. I don't have a good opinion about SA. Though there some good people there. I don't follow SA - not worth my time IMO. Regarding diversification/concentration, yeah it's an old topic on this thread. :) I am amazed at your outperformance with your superdiversified portfolio. Personally, I can't run concentrated portfolio for the life of me. Like you say often, my "best" ideas are usually not good. It's the other portfolio parts that carry it sometimes. Position sizing for me is very tough. Overall 2009 was the last year I outperformed SP500. So it's getting to the point where I don't see much point to do what I was doing. Not sure the changes I am trying now will be for better and if I can persist with them. On the positive side, this is happening at the time when BRK/FFH are cheap, so I can mostly buy them. On the negative side (so far), I got into the whole oil co morass. Might have been better to have that part of portfolio in BRK/FFH too. Anyway, thanks for responding and take care.

To: Paul Senior who wrote (56094)	9/25/2015 5:55:27 PM
From: deeno	2 Recommendations Recommended By ekimaa research1234 Read Replies (2) \| Respond to of 78821

Ot. Just had some time to kill. Individual stock investing I see it as a bit of a horse race. You can buy and sell your odds to other investors up until the actual finish. There is unlimited information about each horse from birth to starting gate. Every piece has been vetted, categorized, and stacked verses current economic data, industry data etc. So there is no fundamental information that is not reflected in the odds. Each time new information becomes available that would skew the odds, they are immediately reflected in changing odds. In fact there are bettors out there who are counting on certain information to come out and have fingers on the buttons ready to place new bets on the fly depending on which news comes out. Even better, they have odds on which news is coming out that might change the odds. Each person reads the same material. They then accentuate those attributes they believe are important. But everyones opinion is aggregated to the overall odds. Individual players are mostly stupid, bias, and have an emotionally evolved system, but as a whole race crowd it is uncanny how often the odds are dead on. Horse racing odds are indeed efficient. The more you read about a horse however and the more familiar you are with their likes and dislikes, the more you can compare your odds versus the street. You just can’t figure out if it’s coming in first, second, third or juuuussst out of the money. There are pros that have looked at every aspect of these horses and sell their opinion on tout sheets and a few insiders who hang around the stable trying to get the inside track on how the horse is feeling. Eventually whatever they glean is found out and correctly reflected in the odds. We all bet on the horses where we can’t believe that others have overlooked some arcane fact about the day the horse was born or that it peed just after leaving the stable. Stupid other people, GREAT odds! Now this race you can bet on till there is an actual winner. So you can bet on the odds as they change. The closer you get to the finish line the less odds you get as the leaders have less chance of losing. This is why a sure thing winner 10 lengths ahead with a few feet to go, instead of paying odds actually loses a bit (buy rumor, sell news). Heaven forbid if a tornado hits or lightning strikes, but hey these things happen. So the idea is to learn enough about the horses running, the track, and conditions so that you might have an idea who is likely to win. None of this information is important until new information is discovered where you decide if the change of odds is warranted or not. You bet based on how sure you are and whether it’s worth the risk. Now value investing is a bit like taking the, well bread, highly trained, good jockeyed, horse that everyone knows about and then betting it to “show”. As long as not much changes in the race you have a good chance. You don’t make much, but something. When you lose however it’s a big bite that takes awhile to make up. A more winners than losers strategy. Now sometimes you look at the odds and say whoa with those odds I’m going for the win! Forgetting that these new odds are in fact likely representing something you don’t know. If you find nothing you dive in. That Doesn’t mean there wasn’t new information coming. If news doesn’t come, well better to be lucky than smart. Paul Senior bets on all the horses except two he can’t stand. He just prays that one of those two horses don’t show up in the winner’s circle. Long term investors just never have a finish line and hope all the other horses die of exhaustion.