Any thoughts? I have almost as much in Amex as I do WFC. Looks like a good deal to me.The P/E hasn't been this low in 14 years. The last two times theprice spiked down it went to around 15:1 in 1998 and around 15:1 again '01 and '02,but it's at 13:1 now. I suspect they will survive and prosper. This is a firm whose most popular product (card transactions) has been priced very much higher than that of their competitors continually for decades. That sounds like a sustainable competitive advantage to me.I like WFC a fair bit better than AXP, better long term growth it would seem.However, Amex is down a lot lately while WFC is up a lot lately,so the short term equation might shift a little bit towards AXP.Both are in my "constant dollar" portfolio.I hold the dollar value of both positions constant.Every time there is a price dip, I buy a bit more, and every timethere is a price rise I sell a tiny bit. This is based on the ideathat I don't really see any likelihood of lasting drops in intrinsicvalue in either, so every price drop is an improvement in upside anda drop in downside risk. It ensures I automatically lighten up on somethingas the risk/reward becomes a little less compelling (say, BNI or WMT), and automaticallyload up some more on things that are getting more compelling (say, UNH or AXP).Plus, if prices are choppy, I make a little profit from the statistical noise.It's a pretty idiosyncratic way to invest, but it keeps me busy so I won't be tempted to do something dumber through the need to do something.The secret is picking stocks for which it's almost unimaginable that there will be a meaningful lasting drop in intrinsic value,and starting with a position size which is sensible based on thesafety margin discount at the time you enter the position.In my mind, ideally the dollar size of your position should never go up faster than the intrinsic value of the underlying security. If itdoes, the risk is rising because you are making money from multipleexpansion, not from underlying growth. This is OK for a while, provided you are aware that's what you are doing (riding momentum),but for very long run holds it's an important consideration.This type of dynamic position sizing does not improve overall returns (as you end up raising a lot of cash as things rise), but it improves IRR and leaves your portfolio with around 1/2 to 2/3 the risk.It works particularly well for me, as I live mainly from theincome on my portfolio, and since I pay no capital gains tax the shortterm profits are as good as any others.Jim
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