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

To: Bill Zeman who wrote (5949)	2/6/1999 10:51:00 PM
From: jeffbas	Read Replies (1) \| Respond to of 78481

Your post brings up an excellent point. A lot of the stocks we mention are value stocks for a reason and TOO OFTEN it is not truly clear when that reason will go away. I personally find I largely own a portfolio which has seriously underperformed the market both because smaller stocks have underperformed larger ones AND because the reason for value is some issue which lasts much longer than we would ever have dreamed. MWY, which three of us who write regularly on this thread own, is a case in point. It sure looked like good value at $10, with very large insider buying at that and higher prices. Here it is now at $8 with more insider buying and maybe going to $6. I am beginning to wonder if our strategy is faulty. If we were to require that a stock both be a value stock and clearly be able to see that the issue was about to go away, we would own almost no stocks at all. On the other hand, if the rest of the market had not made advances that were not merited, perhaps buying value stocks where we could see the issue eventually disappearing (but not next week) would have shown better relative returns. But not in this market.

To: Bill Zeman who wrote (5949)	2/7/1999 2:05:00 AM
From: Michael Burry	Read Replies (1) \| Respond to of 78481

Bill, Re: There is always a reason a stock gets beat down. Yes. But I don't take the following reasons as valid reasons not to buy the stock (in fact I find them good reasons to do the opposite): a)the cycle is down so sell the cyclicals to absurd levels b)the nifty 50 and internets are in, so sell your small caps c)you've lost big in a stock so sell to pay less taxes d) your stock didn't perform well this quarter, so join the institutions in selling to window-dress e) the outlook is poor the next two quarters so sell as a proxy for pre-emptive window-dressing f)a beaten-down stock gets more beaten down out of frustration (e.g. Midway) Oil, commodities and farming are no doubt facing horrible outlooks. No doubt these industries are prone to devastatingly long and deep recessions. However, given your stated style - "Short to mid term in companies I think will pop. - I find it hard to take you taking us to task seriously. Playing the sentiment surrounding 1 or 2 quarter earnings fluctuations may be your game, but to me does not constitute a sound, safe investment strategy. Some of the posts on this thread from seemingly sound individuals have struck as something I might read in Barrons, that noted barometer of popular sentiment. Mattel should be avoided because Barbie is out. Oil should be avoided because there is no near-term good news expected. These statements strike me as asinine, and reflect the growing frustration among value investors, who, like Jeffrey, are doubting their strategy. This only leads to less support for the most undervalued situations. I'll continue to scoop them up as long as I can. The fundamental flaw with your advice IMO seems to be that you believe we can accurately predict the timing of both the fall and the redemption. Moreover, you would like to do it on terms lasting less than 6 mos or so. The flaw in me, which I recognize, is that I can't do that reliably. So I'll stick to investing in the spirit of Graham rather than Pilgrim. Mike