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  • martone7 created personal space. 12 min ago
  • Grahamites commented on Grahamites's article 1 hr ago
    The 8 Levels of Value Investing
    “Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead...
    View all 6 comments
    Grahamites 12-10 18:54
    • Rherion - Thanks for the nice words and thoughtful comments. I agree totally that temperament is also key in beating the market. Very few people can stick to the 20 punchcard philosophy, very much easier said than done. And if one possesses the temperament of only punching 20 times at those big no-brainers, he doesn't need to do too much on the analysis level. I know a doctor who does just that with great track records. 

      And great points on this:"Something I would add besides evaluating a particular investment and the particular subsection of the market that the investment resides in, etc., is risk management and knowing when, and when not, to back up the truck. "

       
  • Grahamites commented on Grahamites's article 1 hr ago
    The 8 Levels of Value Investing
    “Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead...
    View all 5 comments
    Grahamites 12-10 18:46
    • Fung9815 - Thanks for the nice words and thanks for commenting. You are absolutely right that in order to advance to higher level, we need to be more philosophical -- think more about how things work, how people behave, and the story behind the numbers. Great thinking. 
  • Grahamites commented on Grahamites's article 1 hr ago
    The 8 Levels of Value Investing
    “Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead...
    View all 4 comments
    Grahamites 12-10 18:44
    • dj - Thanks for the nice words and thanks for commenting. Just based on your observations, I think you are way more than level II, at least philosophically. I totally agree that early in the value investing journey, it's very easy for value investors to miss out the future multi-baggers because the static valuation multiple is high. I have thought Master Card and Priceline were so expensive back in 2011 or 2012 when both were trading not even 40x earnings but more like 25. It is hard to come up with convictions, for the right reason, that a fast grower like those two can grow at a faster than average speed for a long time but once you do get the conviction, the mistake of omission becomes less likely. And it takes a few more levels of analysis to do that. 

      But, as we both agree, you can still beat the market handsomely even without those multibaggers. Your four points keys sound like a great market beating framework. 
  • Dr. Paul Price commented on Rupert Hargreaves's article 3 hr ago
    Michael Burry Likes Coty Inc., but Should You?
    Previously, I looked at Dr. Michael Burry’s Scion Capital’s most recent 13F Filing with the Securities and Exchange Commission, which detailed...
    View all 1 comment
    Dr. Paul Price 12-10 16:47
    • I'm in total agreement. Too much debt.
  • Benjamin Clark posts: 4 hr ago
    8 Best Stocks for Value Investors
    I evaluated 42 different companies this week to determine whether they are suitable for Defensive Investors, those unwilling to do substantial research, or Enterprising Investors, those who are willing to do such research. I also put each...
    Comment
  • Harsh Jain posts: 4 hr ago
    Barrick Gold's Rally May Resume Soon
    (ABX) fell over 30% in 2015, as the gold price moved from $1,294.40 per ounce to a low of $1,062 per ounce. However, 2016 reveals a different kind of story, as the stock is up more than 100% year...
    Comment
  • reverendbob76 commented on Grahamites's article 10 hr ago
    The Art of Piggybacking
    Piggybacking has been a topic that has been discussed frequently these days. Fellow writer the Science of Hitting’s recent article is quite...
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    reverendbob76 12-10 10:31
    • Investing in any stock simply because David Einhorn (Trades, Portfolio) (or any other hedge fund manager) owns it, is stupid. It is far more useful to know which positions they liquidating. More importantly it is critical that you know what the level of institutional support for any stock is before your invest, and that includes institutional-like investors such as hedge funds.

      If a stock doesn't have significant institutional support then you can throw all of your best finadamental analysis out the window because the only people that are "invested" in the stock are retail speculators, most of whom get up early in the morning and sit around in their underwear buying and selling stocks through an online brokerage account. Most of them have never heard of fiundamentals and wouldn't know what to do with a balance sheet if it hit them in the face. They buy and sell stocks like they are rolling the dice in a casino and the resulting volatility is similar.

      We saw this phenomenon at work recently with the stock of publicly traded companies that are involved somehow in the legal marijuana business. In the months leading up to the November election these seat of the pants, Fruit-of-The-Loom wearing "investors" were running up the price of countless cannabis related stocks 20% to 50% and in some cases as much as 100% in a single day! The logic was that if California and a handful of other states were to legalize recreational marijnuana, the "value" of these copmpanies would skyrocket....well marijuana was legalized in almost every state where it was put to a vote and what happened? What happened was that virtually every one of these stocks has plummeted in value. Even the ones that may have been worth owning! Almost all have given up their pre-election gains in the last 30 days as the underwear investors finally had to get dressed, shuffle off to the rock pile and continue on with their life of quiet desparation.



      The lesson to be learned is that if you are going to invest in any security then you need to do your own research and have a sound reason for making an investment. Part of that sound reasoning is understanding who else owns the stock and the degree to which the stock is owned by the largest players in the market; because the large hedge funds and institutions do in fact drive the "demand" for any stock that they take an interest in. They drive it up when they take a position and they drive it down when the divest. The problem is that you won't know David Einhorn (Trades, Portfolio) owns 18 million shares of a company until after he has made the investment, at which point you will be paying full boat retail price for the stock.



      So you buy in at the top and then when Einhorn decides to sell you watch your position drop in value like a rock falling from the sky. You panic and decide to bail out and cut your losses. Problem is that every other retail investor is doing the same thing, at which point the selling frenzy is on and the price drops even faster as supply outstrips demand. Einhorn has already liquidated his position and you are left holding the bag....and an empty bag at that!
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