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

To: Michael Burry who wrote (5764)	1/13/1999 3:33:00 PM
From: cfimx	Read Replies (2) \| Respond to of 78644

buffet and munger had a little experiment with shorting the fluff on NASDAQ. It stands to reason that the best "value-ers" of corportate assets could tell when a company was vastly overpriced, and they could. THAT was not the problem. Their expeirment was largely unrewarding and altogether frustrating. They even said Graham tried it for a while and got four out of five right, but got WIPED OUT on the fifth! My read from this is that web and cm finally realized that OWNING businesses was what they wanted to do, and was what WORKED over the long haul when taxes and transaction costs were added back. The best investors are, above all else, businesslike in their investing. A corporate allocator of capital would scarcely be sitting in his office allocating precious corporate capital to his five best short ideas. WEB would argue that neither should the individual allocating his OWN capital. The more businesslike an investor is, the LESS he will likely be sidetracked by BETS, GUESSES, or SPECULATIONS on the DIRECTION of individual securities, which, ultimatley, is what shorting is ALL about. Not to mention that the EGO seems more intimately involved when shorting.

To: Michael Burry who wrote (5764)	1/13/1999 3:36:00 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78644

Mike, >Amazon.com... could do 10 $1 billion dollar stock > acquisitions of real companies that needed to earn their >way to $1 billion market cap, and AMZN stock would hardly > suffer. It would not suffer from dilution. It would suffer from unpredictable changes of investor psychology. I.e. investors seeing AMZN buy a "slow grower" would decide that the 100% growth days are over and it's time to bail. The stock would crash in a day. Of course they could buy another bubble stock but such purchase would not improve their situation. >If Amazon started to do that, or did a second offering at > these prices, I'd have to cover. Secondaries are also dangerous to bubble stocks. They increase the float and raise uncomfortable questions about capital use. See my discussion with Paul on IOM's secondary. Good luck Jurgis

To: Michael Burry who wrote (5764)	1/13/1999 4:06:00 PM
From: Bob Rudd	Read Replies (1) \| Respond to of 78644

Order strategies on the net [For those that use web based brokers]: When trying to buy a value stock in a diving market or sell into a spike on a volatile issue, various types of orders may be entered. A live broker will usually understand what you want to do and implement it accordingly. Unfortunately web broker software is only as smart as the guy who programmed it and if you don't understand how your particular program works, you may not get the results you want. For example, today I tried to cover my modest short on AMZN near the open with a limit order of $130 [Not because I think it's worth that, but if someone hands me 60 points within 6 days, I'm gonna grab it and reshort on the reaction]. Because AMZN was trading below my buy to cover limit, the computer kicked out an error [A live broker would have seen the situation and implemented the trade]. By the time I fiddle-faddled around with it and re-entered the order AMZN was well above my take the money and run level so the opportunity was missed. I talked to several folks at the firm about this issue and was told that "That's what the software does" and that I should have entered and buy stop limit order..which this particular software won't do on Nasdaq orders. My point here is not to get into specifics about my software or the firm involved, but just to give a HEADS-UP on unexpected limitations and misuderstandings that can occur using software to enter trades.