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

To: Michael Burry who wrote (6578)	4/4/1999 1:23:00 PM
From: jeffbas	Respond to of 78652

I like your rules. I sort of made a mistake on the second rule with MWY, as I bought more at my initial entry price of $10 as I became more comfortable with it and saw MORE insider buying, which is not really "significantly material new information". I would add a corollary -- that it is OK to buy more at a higher price on significantly material new information so long as you do not buy so much as to raise your average price a lot. Also, you have to watch out to what extent the new info was an inherent assumption in your original decision. I have made the mistake of buying more on news which I knew from inside information was coming when I made the original investment. Two examples: You buy an oil stock because the price is cheap and you believe the next move in oil prices will be up. If the next move is up, this was information you assumed in your original decision. The news justifies SOME (but not major) further commitment at the same or slightly higher price because the negative alternatives, to which you assigned a low probability when you made the investment, have been eliminated. Second, you buy a technology stock because of a new product development you know about but the market does not. The actual announcement justifies no further investment.