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

To: Paul Senior who wrote (4778)	8/22/1998 11:11:00 PM
From: James Clarke	Read Replies (1) \| Respond to of 78625

All this talk about beating the market. Its getting confused. I don't hear Paul saying he doesn't care about beating the market. He's just talking about doing it over a lifetime. And underperforming by 5% in bull markets, but breaking even in bear markets might do just that. The key to Buffett's long term return is not outperforming bull markets, although he does that too, its making money in years the market goes down 30%. Soros has the same kind of record. But the big difference is that Soros shorts stocks, which makes Buffett that much more amazing. I think Michael Price said it best in a speech I heard him give at Columbia. A value investor should not lose sleep about underperforming a speculative bull market - but he better make damn sure he outperforms big when the market gives it back. Trying to "beat the market" over single years (or God forbid, single quarters as institutional investors must) mean simply that you will be the guy fully invested at the top, which also virtually guarantees you will be the guy with no cash to buy at what you know is the bottom. But what Mike said about index funds should be common sense. If you are not confident that you can outperform index funds over a lifetime (and many individual investors, especially the ones making money now, should not be), then call 1-800-VANGUARD. Jim