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Author: RaptorD Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 41630  
Subject: Re: Dealing with your emotions in the market. Date: 9/6/2007 1:40 AM
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... I certainly don't deserve that.

Yeah, bozob, you do deserve that.

You want suspicion? I get suspicious when I want a company bad enough to buy now and I’ll worry about price later. It all goes up eventually, right? Eventually, maybe. It simply does not build wealth. I've found a few exceptions among small- or micro-caps that never seem to be really, really cheap (GRMN is my 2nd largest holding for example) but for these big guys, patience is, IMO, absolutely critical. If ever I like a large-cap company so much I "gotta have it" I've come to anticipate I'm going to be better off with an index fund. If you wait to buy, what are they going to do, double next month? Not likely, and so what if they do? You didn’t lose a penny. So why not look for HOG’s (for example) big brother who's currently much less popular and thus better priced, while you wait for HOG to hit the greasy, money-making bottom? (Or, is this it?)

I think HOG is a great company, and I don't give much advice. Since you flatter us to ask, I would suggest finding several (more is better) companies you really like and really want to own—companies you want to own as much or more than you want Harley--and then patiently wait until one comes to you, right down to that "I can't lose!" price, which only you can determine. For me HOG isn't there but it's getting close. And if I ignore the state of our economy, joke that the idea of "knowing" this is, I'd be a fool. Right now, for Harley, these factors are big fat checkmarks on the "con" side of our Buy/Wait ledger until a lower price allows room to include them. Just my opinon. Otherwise, I’d own more shares of Harley right now.

If you throw away most of the folk-art investing truisms (I can't wait for the next in Denny's series) sometimes it really is this simple. I like HOG, but I'll like it much better if it goes much lower. And if it doesn't, I'll just wait for another company on my wishlist to come to me, meanwhile keeping my cash in BRK. If HOG reaches my buy point and turns down again after I’m in, I'll buy more because I didn't shoot the moon the first time around. I also, btw, didn't jump the gun and put my scarce capital to work far too soon. I want it working hard all year long. I’m a lean, mean fighting … investor. Lastly, with volatility like we haven't seen in the market in years, are we not going to be able to find other opportunities?

And I'm sorry if I sound like a know-it-all, I'm definitely a know-far-too-little. BTW, thanks to mklein9 who gently convinced me just recently of the value of the BRK as cash philosophy, it was staring me right in the face as I already owned BRK. See how this works? :) Learn one thing, pass on another tidbit to someone else and always, always keep learning. It makes the world go 'round. And this board? That's why it works so well. People learn and people share. Simple, but all too hard to find.

So be patient with the price, and be very, very demanding—with HOG and with all your companies. You owe it to yourself. Pretend every dollar counts! :) Meanwhile, are there other companies with moats the size of Harley's that we can look at and analyze? That's why we're here. Let's dig 'em up!

Bottom line? If you gotta have Harley, go for it, and sure as hell I don’t want to be the one to talk you out of it. No way, no how. But first, because you asked and just to see the range of possibilities, please consider two extreme scenarios:

#1: Harley languishes at -2.1 RMS for 9 months, and starts to move upward, never looking back.

#2: Harley is "rediscovered" tomorrow by Wall Street and jumps 5% next week.

Now you expect me to ask, "Which time was a better time to buy?" But hindsight from the future is not available to anyone I know of so the point is moot. So I am asking you, "Which is a better buy time to avoid?" I hope you see the difference. If not, don't worry about it. I'm probably a minority of one here. And that's ok too--it just seems to work for me.

___

AND IF YOU WANT THE VERY BEST ADVICE I HAVE TO GIVE ON BUYING HARLEY NOW, LATER OR NEVER, HERE IT IS:
___

It doesn’t much matter. Far more important, whatever we decide to do about HOG, let’s write down our reasoning where we can't lose it, and revisit our notes every six months. Regardless of our decision, I guarantee we will learn from the process, maybe enough to change our “luck” permanently. Now imagine if we do this for every buy/hold/sell decision we make. With a little effort we might learn something that profoundly affects our personal CAGR now and forever. Wow. Knowledge is power.

There aren't many guarantees in investing, so grab all you can. Oh, and get the guarantees in writing.

No one has all the answers, bozob. But asking the right questions is always the sign of someone who "gets it." You get it, and that's why I know you deserve the title of a good investor. If it were so gosh darned easy like some (liars) would have us believe, we could all get together, sip cocktails, watch CNBC and get rich. And that just won't happen, so let’s ask the questions and get busy.

Dan
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