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

To: jeffbas who wrote (4399)	7/10/1998 9:30:00 AM
From: James Clarke	Read Replies (1) \| Respond to of 78750

I will not argue with anybody with the guts to liquidate their entire portfolio. I tested myself on that four months ago, and found I went right back in. Now I'm in gradual liquidation mode again, trying to get myself into high-dividend and stable REITs (EGP, LHO), Asia (APF) and microcap net-nets (PSO). The common denominator is low correlation with the U.S. market. So even though I didn't have the guts to go all cash, I have well over 50% of my portfolio in these three categories. Plus another 10-15% in cash. Its very easy to say cash is better than value stocks. I probably agree with you. If the market tanks, low P/E stocks are going to drop too. But I don't think the three categories I mentioned go down much, yet they also give me some offense (PSO and HYDEA have made me more money than any index investment would have, and the REITs I have bought have held up just fine. Asia has not been fun though, but that's five year money). My challenge to you is if you actually believe your analysis, what is your cash position. Given what you say, if you're not holding 50% cash, you need to rethink your conviction level. JJC

To: jeffbas who wrote (4399)	7/10/1998 11:01:00 PM
From: Paul Senior	Read Replies (3) \| Respond to of 78750

Jeffrey Bash: re "too many value stocks I am down on". Well that got my attention. When somebody says their value stocks are down, maybe (I sez to myself) them are just the ones to look at now. So, just as an exercise to see if I can find anything I might like and to see why you might be concerned with your value stocks, I took a couple of minutes to see where you've been visiting on SI lately. Here's a list with Yahoo's current estimate of p/bk and psr: CCUR (7., 2.) SUL (1.3, .6) NUHC (1.0, .2) DIIG (2.5, .5) XICO (.6, .3) SUBM (neg, .25) GDC (1.8, .6) SEMI (1.6, 2.) ETEC (3.3 2.8) JBL (5.4, 1.0) DPMI (2.1, 1.9) Okay, a lot of disclaimers here: If you think I'm too snoopy and personal, post back same and I will offer a public apology. I am not saying you own these stocks or even that you have culled them out as value stocks. Only info. I have to work with though. Also, I am not saying I know what I am talking about-- if you read back a few posts you will see I have a bunch of stocks I am down on that I thought were value stocks -- or I thought were value stocks when I bought them at higher prices. Also for my stocks, I admit I am not so consistent as regards p/bk or psr values. Value of course is in the eye of the beholder, and we (you, I, others) have been involved in at least a little discussion of how/best way to value tech stocks. Okay given all that, it does seem from what I see about the stocks you've posted to, that all of them are tech stocks, and very few, even now, have a margin of safety as defined by me (and again, I am not consistent in my own choices) of price below book value. Only 6 of 11 have psr's less than 1. Now I am not saying these stocks aren't good investments at these or even higher prices. However, from my perspective, looking at stocks to screen for value, I think maybe only XICO which is selling at 1.8 vs. 1.3 cash value (.3 debt/eq) and low p/bk and psr might be a value stock (for me). Jeffrey, I certainly understand that in this market environment (maybe in every other market environment as well -g-) that there are concerns about the worth and efficacy of value investing. (Obviously I share some of your concern -- just based on my listing of my own crumbled stocks). Are you sure though you yourself have not gone somewhat away from classic value investing -- these 11 stocks don't seem as diversified or offer a margin of safety (based on my quick scan) that one might expect from straight Graham. Anyway, FWIW, and regards.... Paul.