To: Mark Finger who wrote (11863 ) 9/11/1998 8:09:00 PM From: Rusty Johnson Respond to
Bloomberg, October 1998, pages78-83 ... Out of Favor? Or Dead? Out of Favor? Or Dead? by Pete McArthur1. Live to trade another day 2. Make sure the company still has something to sell 3. Wait for the cavalry 4. Buy near the bottom "You'll never know where the right entry point is,"George say, "so you shouldn't overcommit. Begin with a modest investment, and then if you still like the company's prospects, buy more as the stock drops." 5. Have patience "Things happen very slowly," says Hanrahan. "If you buy based on a change in management, you need to give them time to turn the business around. The company and the stock should move together, but they don't. It takes even more time for analysts and investors to notice that things have improved and then become comfortable enough to buy." He and other contrarian investors will hold on for three to five years if they believe their down side is protected by cash on the balance sheet, book value that is greater than the market cap of the company, insider buying, and the company itself buying back shares. But if cash starts running out and the company starts loading up on debt, even the most patient of these investors won't hesitate to hit the escape button.
