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Subject:  Re: Why I'm Still Holding Onto Yahoo! Date:  11/16/2001  12:54 AM
Author:  OldIronsides Number:  13781 of 15601


I hate to sell at the bottom, too. But like you, I have done so many times. In the vast majority of those cases, the "bottom," in fact, turned out not to be the bottom--the stocks fell even further, sometimes by an enormous amount. (Yes, I've made many mistakes--I'm learning as I go!) So far, I only would have made my money back plus interest on one of the stocks I sold if I'd held onto it through its post-purchase plunge. (I continue to track stocks I've owned even after I sell them, to try to learn from my mistakes.) As a rule, I've sold more losers than winners, trying to follow Peter Lynch's advice to cull your weeds while leaving your flowers alone. (Lynch says most investors sell their winners after a short run, while holding on to their losers in the hope that they'll return to at least breakeven. He calls this tendency a mistake--"Picking your flowers and watering your weeds.")

Even so, I learned early on that I couldn't simply sell because a company ran into serious problems post-purchase and its stock plunged as a result. In each case I had to make a considered judgment as to whether I thought the company was such that it possessed the potential to work through its problems and still achieve meaningful share price appreciation thereafter--even if this took some months or years to accomplish. (For me, "meaningful price appreciation" means eventual compounded annual growth in share price equal to or in excess of what I could have made in a 3- to 5-year certificate of deposit over the same period of time--the place where I otherwise would have parked my money.)

Real-life business is just a lot dicier, more complicated, and less predictable than investors (or analysts or journalists) tend to think. You have to give companies room to breathe. That's why I don't feel comfortable simply applying the Rule Maker criteria to Yahoo! now, during an obvious period of difficulty, and saying, "Dump it!" the way David Forrest does. (There is nothing inherently wrong with David's method. He may well turn out to be right, and I turn out to be wrong. There are a million different ways to approach investing. It's just that I can't comfortably apply that method myself.)

Taking all of the facts and circumstances into account, I feel that I can't make an intelligent judgment about Yahoo!'s long-term potential until ad