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

To: James Clarke who wrote (730)	12/23/1998 4:51:00 PM
From: jhg_in_kc	Respond to of 4691

Why are you guys so mean? I am not buying Amazon or Yahoo or the real tulips. I am investing in very sound companies. AOL is now part of the S&P 500 club. In the not so distant future it will be like AT&T or CBS. Dell is the most efficient company in the U.S. I do not just ride momentum. I can see that it is reasonable to expect Dell to grow at 35 to 50% for a minimum of two years based on IDC reports of computer sales, etc. I read omnivorously about the company. I know it well. The risk to me comes from speculators who drive the stock up unduly high and sell the shit out of it after it announces its earnings, making for more volatility than I'd prefer, but to go up 400% in 2 years certainly enables me to live with this bumpy ride. As to the margin of safety, I have yet to find a stock that can meet this thread's unrealistic standards. I bought Dell at 42 and three months later it is 75; its growth was and is 62%; the same for Cisco which I bought at 46; now 96' its growth was and is 30%. The price was different because as Buffett has noted Mr. Market is a manic depressive. AOL is soaring now because its fundamentals have changed; it is not the same company now as the one whose past P/E you cite. This is exactly what Chuzzlewit meant about the uselessnes of valuation based on past P/E statistics. In one sense, the company is now mounting a direct challenge to Microsoft. Your focus on methodology could lead you to miss this opportunity. I daresay the Graham margin of safety just cannot be found in today's stock market and in the meantime can you say your two biggest holdings are up 200 and 300 percent respevtively so far in 1998? My holdings are far from speculation; they are solid "blue chips" Where is your Dell? Where is your AOL? I am all ears. jhg

To: James Clarke who wrote (730)	12/23/1998 6:46:00 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 4691

Hi everybody, You may want to run some numbers on EFX. It got hit today. At least part of the business looks like a great franchise (risk assessment info for credit card issuers). I don't like the high debt/equity, but some people don't care about it. I wonder if the high ROE is sustainable, so I'd appreciate any knowledlable info. Have Happy Holidays! Jurgis

To: James Clarke who wrote (730)	12/23/1998 7:15:00 PM
From: valueminded	Read Replies (1) \| Respond to of 4691

James (i agree) It has been said by far greater investors than myself part of the problem with the 1929 crash and ensuing bear market was that the public believed all you had to do was "buy great businesses" When you take price out of the equation, you dissolve the difference between investment and speculation. Keep up the good work on this thread. About all I find that I like are positions in hard assets (dbrsy, cym, etc) and some foreign country exposure through closed end funds.

To: James Clarke who wrote (730)	12/23/1998 7:31:00 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 4691

James and others, Growth investing (as opposed to momentum investing) is certainly a valid technique. E.g. look up T.Rowe Price in John Train's "Money Masters". However, you must be extremely careful when the prices paid for the growth approach ecstatic levels. See how the T.Rowe Price fund fared after the master himself left and his successors continued on the "growth at any cost" autopilot. Some people will argue that "times have changed" and XYZ PE and PSR levels are justified for ZYX company. I won't argue with them, but I probably won't buy the ZYX company either. To each his own..., or as Buffett said, "You only have to swing the bat for a perfect pitch". It looks like even without ZYX company, I have more pitches, than I have bats. ;-) Just to keep on topic ("Buffetology"!), I think that Buffett uses a blend of growth and value investing, that James succintly described in the previous message. So let's try to keep these principles in mind when you recommend your stocks on this forum. Happy Holidays Jurgis