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

To: Michael Burry who wrote (3367)	2/26/1998 11:04:00 PM
From: jeffbas	Read Replies (1) \| Respond to of 78507

I find buying price discontinuities on bad news has been an exceptionally poor strategy for me. I have rarely seen an exception to the old rule that the first disappointment is usually not the last. That is because the first disappointment is often the result of poor management, which survives the initial problem to ruin another day. (A truly extraneous event would be an exception.) So as a long term investor, not a trader, my policy is to wait for a few disappointments to really beat up a stock price, look for insider buying, and study the company inside out and backwards meanwhile. (This approach plus intimate knowledge of the industry kept me out of a certain health care company.)

To: Michael Burry who wrote (3367)	2/28/1998 2:58:00 PM
From: Shane M	Respond to of 78507

Mike, I read the Buffettology book also, and subsequently built some screens and an Excel model to calculate minimum future values as described in the book. The difficulty I have, however, is that extrapolating Equity per share into the future seems as risky as predicting earnings per share. I'm finding that most of the stocks that look to be good buys (15+% annual ROI) have projected equity per share growth of 25+% compounded. I'm reluctant to assume such robust growth over long periods of time. Are you finding the same thing? Some of the bigger names showing up are Schwabb, Cisco, Calloway, and Oracle. Some stocks that I've seen mentioned on this thread: NCI Building Sys, Medusa, and Deswell. Note that this screen does not consider the monopoly power component that Buffet considers crucial. Shane