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2016-02-04

  • The Science of Hitting commented on The Science of Hitting's article 02-04 12:13
    Why I'm Moving Slowly as Markets Fall
    With the Standard & Poor's 500 down roughly 5% in January and continuing to move lower in the early days of February, I’ve noticed an uptick in...
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    The Science of Hitting 02-04 12:13
    • "Using this approach, we think our long term performance has provided adequate returns to our investors."

      Last I remember you were roughly 2x (net) the S&P 500 since inception - so I think that's safe to say! Thanks for thoughtful discussion Tom and Dr. Paul. 
  • The Science of Hitting commented on The Science of Hitting's article 02-04 06:28
    Why I'm Moving Slowly as Markets Fall
    With the Standard & Poor's 500 down roughly 5% in January and continuing to move lower in the early days of February, I’ve noticed an uptick in...
    View all 4 comments
    The Science of Hitting 02-04 06:28
    • Dr. Paul,

      I agree with most of those statements. Using Berkshire Hathaway as an example, I can't argue with your math; unfortunately, the stock is only down 16% from its peak, not 30%. To the extent declines continue, you are dead right: the entry points look good (by my math) and I'll be buying more. As I noted in the article, you should be buying if you are seeing securities trading at a material discount to intrinsic value; personally, I question if those discounts are wide enough at this time (for most of the companies I'm looking at). 

      The point of the article isn't to try and guess the bottom in markets / individual stocks. Again, I think the example from Seth Klarman (Trades, Portfolio) is instructive: he's been very comfortable holding large amounts of cash (based on what I've read he was back near 40% again at year end 2015), but still has produced an extremely impressive track record over a long period of time (while they operate in areas outside of public equities, I'm assuming the ~20% CAGR from 1982 - 2008 represents outperformance versus the ~10% CAGR for the S&P 500 over the same period).

      As far as I know, very few investors operate that way (i.e. willing to hold 40% cash). At the same time, there are very few investors with a track record anywhere near Baupost's. I'll leave it to you to decide whether or not you think those items are related or mere conicidence. 

      Thanks for the comment!

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