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

To: Paul Senior who wrote (3411)	3/3/1998 12:51:00 AM
From: Ron Bower	Read Replies (1) \| Respond to of 78528

Paul, It's probably foolish for me to disagree with you or Abe (or most others on the thread) because I don't have the experience. BUT - I very much disagree with the 'buy and hold' strategy. Our objective, at least mine, is to maximize returns. I'm not interested in an attachment with a company, just using it to make a profit. As value investors, we should be looking for undervalued stocks to buy. It doesn't matter which company, but that it's worth more than it's selling for. By the same token, if it gets to a price above it's value, we should sell it. If the market pushes it above that point, the market is either foolish or they know something we don't. In this market, I vote for the former. As you've posted, if one looks hard enough, there are numerous stocks selling under value. Why should your money be in a stock that's overvalued when it could be in one that's undervalued? Why should one hold a stock that will gain 20% in the coming year when it's possible to buy one that should gain 20% (or more) after the next earnings report? It takes research and effort but any individual investors that aren't ready to work at it should put the monies into a fund and let others work at it for them. IMO - Value investors only have two advantages over the professional Fund managers. First, we don't run with the herd. Secondly, we can move in and out of stocks without effecting the price. We don't have the research capability of the Pros. When we call the company, we can't talk to the CEO. We are usually unable to attend the meetings. We can't go to the company and ask questions or to their suppliers and customers for opinions. We are limited to financial statements, press releases, and discussion on these threads. Most major stocks are fully valued and we would be the last to know if they are going to fall off in value. There is a third advantage - we don't have a pot full of money we MUST invest in something with restrictions on what we can put money into. I would rather pay high taxes on a 200% portfolio gain versus low taxes on 30-40%. I'm not trying to change anyone's investment style, just giving reasons why I disagree and why I invest the way I do. For what it's worth, Ron

To: Paul Senior who wrote (3411)	3/3/1998 9:47:00 AM
From: Honest Abe	Respond to of 78528

Paul said, "Unlike finding undervalued companies, opportunities to buy into partner companies at reasonable prices are few IMO (and again Phil.). (There aren't a lot of new companies being mentioned on the Buffettology thread! -g-)" I have to agree wholeheartedly with you here. Which is also the reason I have yet to make a stock recommendation on this thread. I am currently in a major research project in the search for an acceptable priced 'partner company'. I will hopefully have one to offer in the next 2 months.

To: Paul Senior who wrote (3411)	3/3/1998 4:03:00 PM
From: Terrapin	Read Replies (1) \| Respond to of 78528

Paul, This discussion on when to sell comes at a very important time for me. In the interest of adding to the discussion I would like to submit my "problem". I have had a ~%100 gain in 14 monthes with a company called Tyco International (TYC). They have four major business units which have grown through acquisitions (and continue to grow). I have been very impressed with management and basically have no complaints. I could not recommend it as a value at this point although I admit to losing track of its balance sheet after all the M&A that has been going on. I have no specific use for the money except to maybe feed an already bloated cash supply. My question is who on this thread would sell this company and take the gains and who would hold based on my faith in management and confidence in their business plan? I hope the thread could use this "real world" example as fodder for more discussion on when to sell. Clearly selling at the right time is just as important as buying at the right price. Thank you, John