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

To: Freedom Fighter who wrote (417)	6/20/1998 6:44:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

<< However the whole point of the extra work we do as analyst/investors is to try to improve on those returns. >> I agree. I was referring to what Graham described as the "conservative" investor, i.e., one who wants to safely attain average results without a lot of bother. As you know, long term dollar-cost-averaging into a large cap Index, counterintuitive as it might seem, does beat that Index, and therefore will exceed not only the returns of the average investor, but the Market average itself. << This can only really be accomplished by concentrating your purchases in cheap stocks (which usually appear in cheap markets) and possibly selling overpriced ones (in markets like todays). In order to shoot elephants you need a gun! Meaning you must have cash available before the bargains become present. >> Yes. Fortunately, many working age investors are fortunate enough to spend less than they make, and therefore have an ongoing stream of funds to invest in the Market. Often they do so through a 401k, IRA or similar tax advantaged vehicle. The conservative investors among this group need only make regular contributions into an Indexing product. Vanguard, for example, will be only too happy to arrange regular, fixed amount deductions from their customers' bank accounts and invest them, commission-free, in an Index fund, in increments as small as $100. It is certainly true that for those of us intrepid enough to attempt to beat Mr. Market (what Graham called "enterprising" investors), if we intend to "buy low and sell high", it's a good idea to begin by buying low. But, a question that arises is whether or not there is an absolute measure of "low", or whether relatively "cheap" (i.e., relative to the rest of the Market) is the best we can do, lest we wind up attempting to "time" the Market, even if we call it "pricing" or some other rubric. I think Warren Buffett's just-announced $22 billion tender for General Re (news account copied into the following posting) is telling on this point. As a long term Berkshire owner, what's your interpretation of this acquisition?