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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: Berney who wrote (249)	4/23/1998 6:25:00 PM
From: Reginald Middleton	Read Replies (2) \| Respond to of 1722

<It seems that for years folks have been trying to put forth the proposition that Magellan's under-performance was due to its massive size. Most of my general reading has indicated that size is a disadvantage not an advantage.> You are comparing a registered investment company with a man who invested through an insurance holding company. They are contrained by two totally different set of rules. Guess which one is the most stringent and least tax advantaged. Under the state insurance laws, FASB and GAAP, Buffet was able to arrange interest free loans by the way of deferred premium investments, mutual funds cannot not do that and neither can small investors. The Solomon deal is a perfect example of how size matters. Do you think you, as an investor could have recieved a deal as sweet as Buffet on his preferred stock private placement offered by Solomon? If not, I can tell you the reason is size and stature. Solomon's chairman was running away from Phibro and leveraged the assets of the small common shareholder for the big man. <I believe that his superior returns have more to do with his astute observations and timely acquisitions, which creates the momentum, and not the other way around.> Yes, but many investors make astute investments - some of which are better than Buffet's. When he decides to by silver, what does the rest of the market do? Does this cause his investment to appreciate? I am not saying that he is not a good investor, but you must be cautious not to credit other real life forces that are unrelated to reasearch to his investment acumen. <To use the Solomon experience as indicative that he takes an active role in management is flawed. He clearly viewed it as a role he did not want and exited as soon as possible. His active involvement was necessary to protect "his" shareholders and their investment.> I think NOVL's management is flawed, can I step in and exercise my superior execution style when my NOVL investment is at risk? The answer, if I was an average investor is no. The reason is due to the size of my investment. There is no flaw in reasoning by realizing that money is power and more money is more power.