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

To: James Clarke who wrote (3845)	4/15/1998 12:14:00 AM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78501

James, > If you have read my posts in the past you will know that > I am not the kneejerk fearmonger you are trying to make > me out to be. You are not a "kneejerk fearmonger" and I was never trying to make you one. I was just wondering why people start making decisions using macro economic and general market data when most of their investment decisions were made using company specific data. I find this intriguing and, yes, irrational. To tell about myself, I have done some market timing, and I am pretty bad with it. So I decided to follow mostly valuation based buy-and-sell approach combined with buy-and-hold forever. Consequently I am surprised that lots of people whom I regard as great value investors use some sort of market timing and short term trading. Mike Burry does some shorting, you do a portfolio adjustment to cash, etc. I am also surprised that lots of fundamental investors turn bearish while I still find attractive buys. I'm interested in whether these decisions are "kneejerk reactions", succumbing to the pressure of too much media (like the WSJ story you mentioned), ego trips ("I know better than these jerks in a market"), or whether they are well thought of hedges, portfolio allocation plans, and overall sell strategies. I was trying to find out exactly how you got into your decision and to raise some (controversial) questions. I would ask the same questions to Vinick (sp?) and Buffett but they are not on SI. :-) :-( To confuse matters even more, I think that intuition based style may work great for some people, so "irrational" is not a dirty word in my dictionary. :-) > I am not posting any more justifications Here's a thing I don't understand. Why do you care about justifications? First of all, I understand your reasons and I think they are valid - at least for you. Second, even if I thought they were totally wrong - why do you care? I'm not your boss... :-))) If you are right, justifications are unnecessary. If you are wrong, they won't help. ;-) Even if you are wrong, nobody's been right all the time. People worship W. Buffett, but they forget how many mistakes he made. > I'd love to dissect that last post If you have time and interest, I'd like to see a dissection. You can send it by e-mail or private message if you prefer. I can promise that I won't ask more questions if you like. And I'd really like to see the Japanese net-nets. ;-) Thanks and good luck Respectfully Jurgis

To: James Clarke who wrote (3845)	4/15/1998 12:59:00 AM
From: Paul Senior	Respond to of 78501

James: making stock/bond (or cash) allocation would have to be judgment call - with each of us having different opinions. Per Graham (1974), "If, as we have long believed, the stock market has lost contact with its old bounds, and if new ones have not yet been established, then we can give the investor no reliable rules by which to reduce his common-stock holdings toward the 25% minimum and rebuild them later to the 75% maximum." Writing about the high (-g-) levels being seen in 1972, Graham says (p. 42), "...we would counsel against against a greater than 50% apportionment to common stocks at this time. But, for complementary reasons, it is almost equally difficult to advise a reduction of the figure well below 50%, unless the investor is disquieted 'in his own mind' (Graham's italics)about the market level, and will be satisfied also to limit his participation in any further rise to, say 25% of his total funds." Looks like you're following exactly what Graham says. (I equate cash in money market funds with bonds in all of this.) Interesting to read about concern for selling due to tax consequences. Since value investors buy undervalued and sell at full or fair value, I would expect tax ramifications not to be the key component for determining timing of sales. At least that's what I would expect from myself for value stocks. However, it seems in this market, when many value stocks go up so quickly, I find that I seem to want to hold on to reach 12 or 18 month timeframes. Or try to offset losses with gains or vice versa. Just can't seem to ignore the tax consequences in the sell decision -g-. Paul