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

To: Investor2 who wrote (953)	1/6/1999 2:08:00 AM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 4691

>However, despite all of your analysis, you >conclude that it is better to hold TAVFX than to buy >the S&P 500 index. No, that's not my conclusion. I said: I would increase a cash position first, buy more BRK second, and TAVFX third. However, that's my personal decision because my cash is depleted. What would I do if I had lots of cash right now? Still would hold some cash position. Would buy more BRK - I think that BRK is the only company that may fall less in the bear market that the index. Even value funds like TAVFX or value companies may fall as much as the index. The only "safe" holding is cash. As a side note, I like Buffett's ability to find unconventional investments in the overvalued bull market that also protect him from possible bear market. I am not predicting a bear market. I am just trying to find the best target for my investment. I don't think S&P500 at current valuation fits the bill. > Why? Hasn't TAVFX grossly underperformed the >index over the last couple of years? >Even at its historical best, it was all TAVFX >could do to keep up with the index. I believe this is not true. See morningstar.net TAVFX outperformed S&P in 1992 and 1993 with a substantial margin. Can you point me to the data that led you to the opposite conclusion? >Is the index really that much more overvalued than TAVFX? Well, S&P500 has P/book ~7, while TAVFX has a P/book ~2.5. PEs are 31 and 25. (Sidenote: BRK's P/book 2 does not tell much without extensive analysis!). However, these ratios don't tell the whole story. TAVFX is the deepest value fund you can get. Look at its portfolio. Even Tweedy Browne holds some Buffetty stocks that are not value picks (e.g. MCD). Marty Whitman buys very very low. That's another reason why I hold a part of portfolio in his fund. I may be comfortable buying PEP, NKE and MCD on my own, but I don't want to buy most of Marty's picks. In case of OAKMX, CFIMX, TWEBX, I say: "I probably can do the same thing they are doing". In case of BRK and TAVFX, I say: "I can't do things they are doing, let them do it for me". BTW, if you or someone else has good suggestions on value or Buffetty mutual funds, please let me know. Only less than 50% (preferably less than 25%) annual turnover please. ;-) Hope this is not too much off topic. Good luck Jurgis