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

To: James Clarke who wrote (3060)	1/16/1998 12:54:00 AM
From: Paul Senior	Respond to of 78661

James Clarke: re CAN and USC. I also come up with comparable USC take out price of about $22 - based on 1998 earnings estimates as provided by Yahoo for CAN and USC, and USC takeout at about $38. (My $22 presumes the buyer has a strategic intent.) James, Must be frustrating for you right now to be so close, but you were and are still in the game. And the year's just beginning. Lot of good things can happen. Paul

To: James Clarke who wrote (3060)	1/16/1998 10:04:00 AM
From: jeffbas	Respond to of 78661

"Historic average of 9%" - Nice reminder. I think at some point in time, after 15 years of fabulous returns, we are due for a long period of sub-average returns. I still remember getting into the market in the mid-60's and waiting 15 years for any progress on the Dow. That does not mean to say that you cannot make money in that environment, but it is not the same when there is no underlying uptrend. (I also suspect that the two 15 years periods are not coincidental as an indicator of change ahead.) We might well see an average return over the next 10 years of 0-5%. (The only reason I do not say zero is because the demographic flow of funds is probably better than in the 1967-82 period.) If so, what does this mean for us? It certainly means that we do not "have to own stock". A money fund will give you competitive returns. (In fact, a close friend asked me for advice just last nite for her aging non-wealthy parents who just got $25,000 - I suggested Vanguard money fund for time being.) A 0-5% average stock market return means a large minority of stocks will go down each year, and most will not have dramatic gains. Therefore, it seems to me that whether you are a growth or value investor, new funds should only go into really good ideas, not ones where the best we can say is that "it looks pretty good". Also, we should be more than average price sensitive since the next correction will indeed often be just around the corner in this kind of environment and there will be lots of other opportunities if we miss this one. Just a little reflection from someone who has seen a lot of markets, including 1973-4.