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

To: valueminded who wrote (3270)	2/21/1998 12:50:00 AM
From: jeffbas	Respond to of 78510

In my view, a good short is a company with both poor short term and long term fundamentals, with an overpriced stock and not a lot of company on the short side, NOT just an overpriced stock. There are so few companies that would meet this criteria, in my opinion, that it is not worth taking the time away from searching for good long ideas.

To: valueminded who wrote (3270)	2/21/1998 1:58:00 AM
From: Paul Senior	Read Replies (2) \| Respond to of 78510

Most interesting post and situation IMO. I see from your profile you are a mature adult with a technical education and 2 years experience in the investing column. With not such good luck with your short positions, and not finding value plays. Excellent! By my standard advice you should be doing other things also. I would advise you to try margin - as much as you can stand - as well as maintain a very concentrated portfolio. Also at this point you should be buying and selling calls and puts. The idea - my idea anyway - is the sooner you go bust, the quicker you will learn. You should by now also be getting that queasy feeling: you already know that all stock indexes are at record highs (IMO), and in some areas, it's been near impossible to lose money in some investments (like banks and pharmaceuticals) or certainly with a package of some others (REITs perhaps, or tech stocks bought about 2 months ago). So with most of us "investors" seeing record gains in this the best of times and you realizing you're not part of this picture (based on what I think you are saying and info. you've supplied) you should indeed be asking yourself two questions: The first you got: How can I make money by improving my short tactics? You are almost ready for the second question. Can I make money shorting stocks? This will come from testing the common assumption that if stocks are cheap, you buy 'em and if stocks are too high (or have no value behind them) you just do the opposite - sell 'em short. You are about to realize that most people - and you may be one of them - will not make money shorting stocks. It's like comparing walking and walking backwards. Seems like backwards walking should be the mirror and simple reverse of forward walking. It ain't. And shorting successfully is way different too. But also unnecessary for investment success. It seems to me I am finding what I consider a value stock about maybe once per week or so on average. I buy it and I post my comments here (some exceptions if I'm still building a position in it, or maybe it doesn't quite fit the value mode - maybe a spinoff like NCR for example, or dividend play like NationsBank, or I'm out of town, etc.) Generally I don't get much response - maybe no response - which I've learned over the past year - I would like to believe this anyway - is a function of each person's somewhat unique definition of value or their particular interests. Sometimes though- I hope not too often - it's because people flat out believe I am totally incorrect about a stock and there's no way they could ever see the stock as a value stock, so they pass by without comment. (And sometimes they are very right -g-). And sometime people post and try to be nice about telling me I am wrong (and again, they are sometimes right). But all through the past year I have had to read through posts where people bemoan the lack of opportunities for value stocks. So of course I am going to say BALDERDASH. The blithe comment "given the lack good value plays" just smacks too much of the conventional wisdom. I think you've been hanging out too long (or too short -g-) with the players on Mike Burke's thread. You will begin to make money when you begin to know what kind of an investor you are - and that's not about learning tricks of the trade. If you are for value then you are a value investor. If you are for short term or quick turns then you are a PLAYer. You will be one or both. And not at the same time. This means there are NO VALUE PLAYS. Sorry if I am harsh with you. It really relates to me though because I feel as if I'm in the very small minority (who believe they are finding value in a variety of stocks), and I am fighting the consensus. And they may be right --- and I could be very, very wrong. If so, I am going to face some financial consequence which will be very painful. On the other hand, I continue to find beaten down large cap stocks, small cap stocks selling below net assets per share, stocks reasonably valued in book value, sales per share, dividend, cash flow, etc. - and I am buying them. Every week or so. Paul Senior