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Berkshire is so cheap right now, where the heck are the buyers?????? All these articles, but yet stock is dribbling down again today. Supply and Demand clearly at work here. I know it will go back up and get back above 81.00. I own BRKB shares and this slide is unbelievable. Wanting to add more, but waiting OH so patient for maybe a market capitulation this week and I can add some at a even better point.
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No. of Recommendations: 1
Berkshire is so cheap right now, where the heck are the buyers??????
It is not the buyers, it is the sellers. There are too many "investors"
who don't have a clue.
GK
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No. of Recommendations: 0
if we get to 90%, i'll make sure it is 2/3 to 3/4 of my portfolio, although if i had guts, i would make it 90% or more...i know Munger would.
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typo: 90,000, not 90%
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<< There are too many "investors"
who don't have a clue.
GK >>


why call buffett names ?

troll jr.
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No. of Recommendations: 26
Berkshire is so cheap right now, where the heck are the buyers??????

Here's one theory.

Imagine three types of investors.
(a) those who have an idea what it's worth
(b) those who are as-rational-as-is-possible short term investors who
know that what's most likely to do well is what has been doing well
recently, (especially if it's reasonably valued), and
(c) those groping around in the dark.

Everybody in (a) already bought as many shares as they can.
The folks in (b) are not interested because it's in a clear downtrend trend relative to market.
Here's a graph of the ratio of Berkshire's price to that
of the average S&P 500 firm in the last 3 years.
http://stockcharts.com/h-sc/ui?s=BRK/B:RSP&p=D&yr=3&...
June 8 2010 to June 8 2011: average S&P stock total return +27.1%, Berkshire +2.1%.

So, now it will drift aimlessly in the control of the (c) folks who know little.
That will continue till, through random fluctuations, it drifts up
high enough to tempt the people in (b) to buy or (a) to sell.
My guess is we'll see a few short fizzling periods of outperformance until it's
just enough to get the momentum boys on board, then we'll see a big rally.
At a guess, I imagine this will probably happen in under 3 years.
Till then? Watch it wander and shake your head.

The market price will almost certainly pass through fair value again
within a couple/few years. All we have to do is resist selling till then.
I expect we'll probably see prices under $100,000 again some day though.
Not a prediction, just saying that it wouldn't surprise me and would be
consistent with the magnitude of variation which is seen from time to time.
Obvisouly if I were sure I'd sell now and buy then, but I have no idea.

As an investment manager who has recommended a large allocation to
Berkshire, I sure can see why investment managers never do that!

Jim
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No. of Recommendations: 46
Berkshire is so cheap right now, where the heck are the buyers??????

When I am asked why the stock of a healthy company is falling, the most honest answer I can give is “I don’t know.” Outside of an announcement of some material change or result, I believe that it is a mistake to have much confidence in the explanations, mine or others’, for price movements in any specific company. Asset prices often rise or fall for reasons that are overdetermined – that is there are several interacting reasons, the impact of any one of which is impossible to determine. It is often too complicated to understand.

The problem with trying to understand the “why’s” behind price movements is that undue importance is attached to understanding. To a value investor, ultimately it does not matter. The only question of any real importance is “Is the asset grossly undervalued, slightly undervalued, fairly valued, slightly overvalued or grossly overvalued. If one can determine that, he knows how to act, regardless of the reasons.

I think that in the short term, which can last for a year or more, almost all price movement in any one particular asset is caused by price movements in its asset class as a whole. Or even in investible assets as a whole. Cash flows this way and that, based mainly on the prevailing emotion of the day. A wonderful company, such as Berkshire, gets valued not on a rational expectation of its long term future free cash flows, but the emotional mindset of the people who are conducting trades during that period of time. Long term assets are valued on short term expectations.

The job of the investor is to get his or her own emotions under control. ( I always have a slight inward cringe when I talk of controlling emotions because of implications of numbing down, which is not what I am talking about. ) The best way to get your emotions under control is to have confidence in your valuations. Then, as Mark Twain said, you can act “with the serene confidence which a Christian feels in four aces.” When the world is burning, it is hard for me to act contrarily based upon hope, gut feeling, desire, should-happen, always-has-happened-in-the-past, the opinions or recommendations of others, instinct, experience or even discipline. All of that will often fail me. I have to know that I am right and about the only way I can get that confidence is through the analysis of value.
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No. of Recommendations: 1
http://www.huffingtonpost.com/2011/06/13/larry-summers-op-ed...

Maybe Berkshire is so cheap because who has any money to buy stocks with??
Larry Summers, who is wicked smart seems to be pushing for more stimulus and low interest rates.

By Lawrence H. Summers

CAMBRIDGE, Mass., June 12 (Reuters) - Even with the massive 2008-2009 policy effort that successfully prevented financial collapse and depression, the United States is now halfway to a lost economic decade..

After bubbles burst, there is no pent-up desire to invest. Instead, there is a glut of capital caused by overinvestment during the period of confidence: vacant houses, malls without tenants, and factories without customers. At the same time, consumers discover that they have less wealth than they expected, less collateral to borrow against and are under more pressure than they expected from their creditors. Little wonder that private spending collapses and that post-bubble economic downturns often last more than a decade and are only ended through external events like military buildups.....

What then is to be done? This is no time for fatalism or for traditional political agendas that the two parties have pushed in more normal times. The central irony of financial crisis is that while it is caused by too much confidence, borrowing and lending, and spending, it is only resolved by increases in confidence, borrowing and lending, and spending. It follows that the central objective of national economic policy until sustained recovery is firmly established must be increasing confidence, borrowing and lending, and spending. Unless and until this is done, other policies, no matter how apparently appealing or effective in normal times, will be futile at best...


It is far too soon for financial policy to shift toward preventing future bubbles and possible inflation and away from assuring adequate demand. The underlying rate of inflation is still trending downward, and the problems of insufficient borrowing and investing exceed any problems of overconfidence. The Dodd-Frank legislation is a broadly appropriate response to the hugely important challenge of preventing any recurrence of the events of 2008. It needs to be vigorously implemented. But under-, not over-confidence is the problem of the moment and needs to be the focus of policy.
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No. of Recommendations: 10

Larry Summers, who is wicked smart seems to be pushing for more stimulus and low interest rates.


You call that wicked smart?

The country is buried under a mountain of debt.
The federal state and local governments borrow & spent so much money, money that could never be paid back.

Most US citizens are loaded with credit card and mortgage debt
up to their gills. Large portion of this debt will not be paid.
The large banks are technically bankrupt, so the government (the FEDs) bought their losing papers at unrealistic prices and changed the rules
so they don't have to account for the junk on their balance sheets.
The FED are printing 100s of billions of dollars per year.

So what do we need?
Borrowing some more?
Getting deeper into debt?
Printing more money?
Spending more money in support of the public workers unions?
Spending more money to support the life style of the over 65 crowd?

Just some thoughts.
GK
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No. of Recommendations: 3
FWIW, Charlie Munger on Larry Summers from the Spring 2009 Stanford Law Review:

"I am a right-wing Republican, and I like the fact that Obama has put into the White House Larry Summers, who is a ferociously smart human being and will try to do the right thing even if it offends some people. I think that’s a quality that we need right now."

http://stanfordlawyer.law.stanford.edu/issues/80/sl80_articl...

Obviously we don't know what Munger thinks of Summers today but that quote has been reason enough for me to read anything Summers has said over the past couple of years. I do not agree with almost anything President Obama does on economic policy but felt better about the Administration when high quality people like Summers and Volcker were in the loop. With Goolsbee now about to depart, I fear that only yes men and political operatives remain on the White House economic team.
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"So what do we need?
Borrowing some more?
Getting deeper into debt?
Printing more money?
Spending more money in support of the public workers unions?
Spending more money to support the life style of the over 65 crowd."

I know Buffett says there has been enough stimulus, I know everyone is saying how we're over-burdening the next generation and that high inflation is bound to be next but Summers is saying, Listen we're still in a big economic crisis; let's keep the wheels greased and we'll figure everything else out later.
We need confidence. We need low interest rates, and if history is any guide, unfortunately, we need a war. But instead of a deadly, bloody, war how about a goverment lead war on fear. I can't tell you how many under-utilized brains there are out there. It makes me sick to see so many talented under-employed Americans. We need tax subsidies to businesses for new hires, I think the government needs to subsidize and support more US manufacturing efforts. I also think illegal immigrants are taking too many of our jobs.
Larry Summers is a very smart man and he does have Obama's ear.
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No. of Recommendations: 35
"We need tax subsidies to businesses for new hires, I think the government needs to subsidize and support more US manufacturing efforts."

One other idea - If we had used the stimulus fund to rebuild the interstate highway system rather than fund transfer payments, that would have created an enormous number of jobs and provided tangible benefits that Americans could see every day. I wish the stimulus would have focused on areas where nearly everyone agrees government has a role - such as roads. The country would be more united today, people would be less cynical, and the recovery would be far healthier.
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"If we had used the stimulus fund to rebuild the interstate highway system rather than fund transfer payments,... "

Like the Japanese who built countless bridges to nowhere after their bust?
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...Larry Summers, who is a ferociously smart human being and will try to do the right thing even if it offends some people.

Interesting, given Munger's distaste for financial innovation on Wall Street.

I just saw a documentary called "Inside Job" about the recent financial crisis. Larry Summers was portrayed as very operational in overturning the 1934 legislation that prevented banks with customer deposits to engage in investment banking, paving the way to the creation of to big to fail financial institutions. He was also credited for having derailed early attempts to regulate derivatives - the financial weapons of mass destruction.

http://en.wikipedia.org/wiki/Inside_Job_%28film%29
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http://www.boston.com/news/local/articles/2005/01/17/summers...
Summers speaks his mind, and he was ousted from Harvard for asking aloud what many people wonder. Why are there not more women scientists and mathematicians?
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No. of Recommendations: 4
"We need tax subsidies to businesses for new hires, I think the government needs to subsidize and support more US manufacturing efforts."

One other idea - If we had used the stimulus fund to rebuild the interstate highway system rather than fund transfer payments, that would have created an enormous number of jobs and provided tangible benefits that Americans could see every day. I wish the stimulus would have focused on areas where nearly everyone agrees government has a role - such as roads. The country would be more united today, people would be less cynical, and the recovery would be far healthier.

-rationalwalk


This is exactly what FDR did in the 30s with unemployed WW1 vets and even younger men - built government infrstructure. These men on government projects were provided three hots, a cot, showers, discipline, and a paycheck at the end of each week. Later, many of the works projects youngest men signed up for boot camp after Pearl Harbor and had an edge over rookies who had never worked at hard labor in a team.

We recently had 5,000 applicants for 5 jobs at a McDonald's. Meanwhile, asshat banksters are beginning to cut jobs on Wall Street which will be the basis of this coming end of year bonuses.

This country doesn't need to cut back on stimulus. It needs to invest stimulus in the right places, in capital investments which will pay off like the Dwight D. Eisenhower Intrastate Highways has paid off in spades over the past 50 years.

Here's a quick short list which I'm sure everyone could add to and which would bring rewards in the future and prepare this country's defenses:

1. Repair bridges and highways
2. Upgrade our FAA systems connecting airports
3. Upgrade our electrical grid
4. Spend more money on R&D in nuclear fusion
5. Use Amtrak right of way to run fiber optic cable to connect this country with high speed broadband which costs much less than the duopolies most of us face in our home towns.
6. Upgrade our ports, rivers, and dockage on all coastlines and prepare for rising sea levels which may take out low lying areas . . . such as the Florida Keys where I live . . . in the next 100 years.
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"Like the Japanese who built countless bridges to nowhere after their bust?"

.....or the Pharaohs who built pyramids to secure their journey to the "afterlife". Perhaps the greatest "public works" projects of all time.

http://heritage-key.com/egypt/top-10-interesting-facts-about...

Tim
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"Here's a quick short list which I'm sure everyone could add to and which would bring rewards in the future and prepare this country's defenses:"

Aye, here's the rub.

Who decides what infrastructure gets built and who gets to build it?

roads, railroads, airlines, pyramids?

...and where?

Tim
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Like the Japanese who built countless bridges to nowhere after their bust?


We, however, have countless bridges to somewhere being used heavily every day which need to be replaced. I've been to Japanese senior centers complete with spas, winding river pools, fountains & towel service built on top of remote mountains - stimulus projects from another era. I've seen crews of women reinforcing hillsides on roads used 2x a year. What we have here is very different - deferred maintenance on critical arteries.

et
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"Like the Japanese who built countless bridges to nowhere after their bust? "

No, I'm referring to rebuilding the existing interstate highway system and, in certain cases, adding capacity. Anyone who has been on a lengthy road trip understands that this is needed. Such spending would have boosted economic activity in the short run as well as improved long term productivity due to better transportation.

But obviously in any government spending program there would be some waste and some stupid projects would be funded.
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No. of Recommendations: 4
5. Use Amtrak right of way to run fiber optic cable to connect this country with high speed broadband which costs much less than the duopolies most of us face in our home towns.

First of all, the only right-of-way owned by AMTRAK is between Washington, D.C. and Boston. The rest of the railway in USA is privately owned.

Second, an awful lot of that right-of-way already has lots of fiber-optic cable buried under it already, some of it unused because there is too much capacity to warrant the expense of lighting it up. Other railroad right-of-way has electric power transmission lines on it.

I am not so interested in preparing the county's defenses from military attack from abroad as I am defending the country from the abuse we do to ourselves inside.

I personally feel we should defend our environment by rationalizing our transportation system in favor of more fuel-economically oriented methods, and rail must play a large part here. Another means would be to get people to live more closely together and closer to where they work, to reduce the need for a lot of wasteful transportation paid for by those workers that are called commuters. The closer people live together and to their work, the more practical efficient public transportation becomes. The less gasoline and air we need to burn to accomplish the task.

Upgrading the electrical grid may be a good thing, but this is not just a case of stringing more wire. System stability has to be increased. An argument against an overconnected system is the effects of traumatic events in part of the grid taking down very large parts of it. I think it was in the late 1960s that most of New England went out for a long time. And that is just the first that I remember. Excess interconnection is a problem Same in the food business, where when some contamination gets into the food chain, people sicken and die in many states, where if this had been done locally, it would be more easily controlled.

6. Upgrade our ports, rivers, and dockage on all coastlines and prepare for rising sea levels which may take out low lying areas . . . such as the Florida Keys where I live . . . in the next 100 years.

We may not have 100 years. They are abandoning some parts of Norfolk and Virginia Beach right now because it is too expensive to protect them. Bangladesh is also disappearing right now. Some Pacific island is disappearing right now and the people are in dire straights. Righ Now. Not 100 years from now.
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No. of Recommendations: 5
Another means would be to get people to live more closely together and closer to where they work, to reduce the need for a lot of wasteful transportation paid for by those workers that are called commuters. The closer people live together and to their work, the more practical efficient public transportation becomes.

And if people don't actually want to live closer together, we'll just make them ...

One problem is that people in this country are so willfully ignorant. What I suggest is that we make a law that says every house must own a TV and the TV must be on 24 hours a day, with the volume set to a minimum of 70 decibels.

Note that I am not telling people what to watch -- that would be a violation of their freedom! We'll make sure that the message gets out on every channel, including HSN and Nickleodeon.

Enforcement should be pretty easy -- a little black box in every TV. We can supplemented that with random SWAT team style raids to prove we're serious.

This will not only help get the message out about global warning, but about any future crises that come along and demand vigorous action.
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And if people don't actually want to live closer together, we'll just make them ...

Not exactly. People did not use to live in suburbs. Those who were not farmers did live in the places where they worked, towns and cities. They took streetcars or walked to work. Then people like Robert Moses thought it would be better for them to live in suburbs, so he got roads built to enable that. With the roads, stores and people moved to where land was cheaper, but the roads filled up, so they built more roads so people could move yet further. And they did, and those roads filled up. It seems pretty well recognized now that the traffic will fill a road somewhat over capacity, to the point that the conjestion becomes intolerable. And adding lanes or alternate roads does not really help. But it all sells more cars and more motor fuel, and robs the public of the time they waste getting from home to work. And since they are now so spread out it becomes uneconomical to provide public transportation.

But just as they were motivated to move out by cheap gasoline and "free" roads, they may be motivated to move back by expensive gasoline and expensive to maintain roads. This is even starting, in the limited yuppie population, who are moving to cities where they rennovate town houses and build condos. You will not need laws to make people move to cities. Just make it a high status thing and it will eventually happen, just as it did in the 1940s and 1950s to get people to abandon the cities and move to the suburbs.
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"Just make it a high status thing and it will eventually happen, just as it did in the 1940s and 1950s to get people to abandon the cities and move to the suburbs."

OK.....

Are you suggesting that "government" should influence (control) where we work, live, and play and how we should move between each location?

What we eat, what we think, how we are educated, how we obtain health care, how we raise our children.....

I digress.

Tim
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Are you suggesting that "government" should influence (control) where we work, live, and play and how we should move between each location?

What we eat, what we think, how we are educated, how we obtain health care, how we raise our children.....


If we accept the myth I was taught in grade school that the (US) government is an agent of the citizens to effect more effeciently as a collective than what we could do as individuals, than that kind of government would be the appropriate agent of our society to effect the change. It is my view that that kind of change is desirable. Some of my fellow citizens believe this also. I have no idea how widely this view is shared generally, partly because the media present such a distorted view of what people think and believe.

But it is a myth. The reality, or I should say my reality, is that the government is the agent of what I perceive to be the powerful (largely financially powerful) to impose their will on the balance of society. As such, I perceive it to be largely malign. I do not know to what extent my reality is shared by others.

My perception is that the government already does influence (control) where we work, live, play, how we move between each. It builds roads (or not), subsidizes indirectly the use of aircraft and automobiles instead of trains, busses, streetcars, etc. It facilitates urban sprawl and its consequences (both desirable and undesirable). I just wish that, since the government already does control these things, that it do so in a more sane way.
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"Are you suggesting that "government" should influence (control) where we work, live, and play and how we should move between each location?"

They already do.

When the government builds an expressway, the areas around the expressway generally grow in population. When the government builds a commuter rail line stop in a suburb that suburb (and the surronding suburbs) will see an increase in interest in people living there.

It isn't some government conspiracy to control where people live. It is just that people like easy access to travel. That is why in metropolitan areas with decent mass transportation systems people when selling their house will advertise it as being close to the Metra (or whatever the local name is called). It is a selling point.
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<What we have here is very different - deferred maintenance on critical arteries.

Alas, bridges have neither medicare nor votes.

G H U

PS; by special request not copied to author
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Alas, bridges have neither medicare nor votes.

... nor do they have a lobby that makes large contributions to government officials.
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But it is a myth. The reality, or I should say my reality, is that the government is the agent of what I perceive to be the powerful (largely financially powerful) to impose their will on the balance of society. As such, I perceive it to be largely malign. I do not know to what extent my reality is shared by others.

I bet you are popular at parties.
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No. of Recommendations: 2
Actually JeanDavid is going in the correct direction on this one... and I bet there are some board members who can say that he is fun a parties.

After all, they do not call it the Eisenhower Interstate System for nothing. Ike liked cars, lots of returning GIs needed jobs that weren't war related and I cannot imagine that construction companies and oil companies kept their political contribution money in their pockets. One could suspect that there was a lot of bi-partisan support for an exciting new public works project.

Economics drives politics, IMHO.

Ciao,

jan

:^)
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"One could suspect that there was a lot of bi-partisan support for an exciting new public works project."

How could you keep them down on the farm after they saw (Hitler's) Autobahn?

http://www.german-autobahn.eu/

Tim
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How could you keep them down on the farm after they saw (Hitler's) Autobahn?

Why would they bother with the Autobahn when they could take this train? 9 ft 10 1/8 in gauge (normal gauge is 4 ft 8 1/2 inches).

https://secure.wikimedia.org/wikipedia/en/wiki/Breitspurbahn...

Luckily this was never built.
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No. of Recommendations: 21
I think that in the short term, which can last for a year or more, almost all price movement in any one particular asset is caused by price movements in its asset class as a whole. Or even in investible assets as a whole. Cash flows this way and that, based mainly on the prevailing emotion of the day. A wonderful company, such as Berkshire, gets valued not on a rational expectation of its long term future free cash flows, but the emotional mindset of the people who are conducting trades during that period of time. Long term assets are valued on short term expectations.

I have not done any studies but have been banging my head for a couple of years now why valuation methods that seem to have worked reasonably well previously (i.e. a portfolio constructed of undervalued stocks generally increases in price over a reasonable time period) no longer do, at least as well.

I think the explanation is, at least in part, two things: the rise of ETF-based trading, and the growth in complex model-based trading. In both cases, large baskets of stocks are traded without a great deal of analysis of each company's business fundamentals. In addition, a substantial amount of trading is hedging, in the attempt to find a small absolute edge that can be multiplied by leverage.

As a result, if you believe the aforementioned premise, stocks on some model's sell list -- which have little to do with business fundamentals -- will have their prices driven down no matter if you believe with all confidence that you have determined the price to be a steep discount to intrinsic value.

This may not affect the mega-cap stocks like Berkshire or IBM or WMT, but I believe it is a big factor in the tiny companies I tend to frequent. I looked up ownership of a few of mine that had some serious nosedives over the last month for no reason I could tell, and they had substantial institutional ownership by DFA, Renaissance, and other model-driven funds. These are companies with market caps of $20 million to $50 million. Being on one of these funds' sell lists will cause a substantial price drop, for no reason other than being on the wrong side of a proprietary model's results along with hundreds or thousands of other stocks. Those who can't develop complex models can trade and hedge with ETFs to a somewhat similar effect.

It may be that individual stock analysis is becoming a continually smaller factor. Add that to the fact that individual company performance was already, as Elias mentioned, a minority of the impetus behind stock price change, and I wonder where this leads us.

Actually, it has led me to abandon valuation and business modeling entirely, at least until the importance of valuation and business models make a comeback. I believe they will for the same reason that many valid ideas in the financial industry that have fallen in popularity start working again simply because nobody is doing them (the flip side being that even good ideas stop working when everybody is doing them). But in the meantime, for the last couple of months I have been doing strictly technical based trading, and I have had excellent results far exceeding what I would have gotten with any fundamental-based strategy I am aware of.

-Mike
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Actually, it has led me to abandon valuation and business modeling entirely, at least until the importance of valuation and business models make a comeback

And what will make that happen?

Ben Graham wrote that "the owner of equity stocks should regard them first and foremost as conferring part ownership of a business. With that perspective in mind, the stock owner should not be too concerned with erratic fluctuations in stock prices, since in the short term, the stock market behaves like a voting machine, but in the long term it acts like a weighing machine (i.e. its true value will in the long run be reflected in its stock price)."

Graham recommended that investors spend time and effort to analyze the financial state of companies. When a company is available on the market at a price which is at a discount to its intrinsic value, a "margin of safety" exists, which makes it suitable for investment.

If technical trading is working for you now, does that mean it will continue to work for you?
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No. of Recommendations: 8
Actually, it has led me to abandon valuation and business modeling entirely, at least until the importance of valuation and business models make a comeback. I believe they will for the same reason that many valid ideas in the financial industry that have fallen in popularity start working again simply because nobody is doing them (the flip side being that even good ideas stop working when everybody is doing them). But in the meantime, for the last couple of months I have been doing strictly technical based trading, and I have had excellent results far exceeding what I would have gotten with any fundamental-based strategy I am aware of.

-Mike


Value investing requires a different mentality. It is the mentality of a business owner rather than a trader. You certainly can't be impatient and worry about when the market will get it right.

Here are a few quotes that shows Buffett's (and also my own) way of thinking. I think the first quote is especially important.

“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.”
Fortune Magazine, August 8, 1983

“If the business does well, the stock eventually follows.”
“Behemoth on a Tear,” Business Week, October 3, 1994

“Whenever Charlie and I buy common stocks for Berkshire's insurance companies (leaving aside arbitrage purchases, discussed later) we approach the transaction as if we were buying into a private business. We look at the economic prospects of the business, the people in charge of running it, and the price we must pay. We do not have in mind any time or price for sale. Indeed, we are willing to hold a stock indefinitely so long as we expect the business to increase in intrinsic value at a satisfactory rate. When investing, we view ourselves as business analysts - not as market analysts, not as macroeconomic analysts, and not even as security analysts.”
1987 Letter to Berkshire Hathaway Shareholders
http://www.berkshirehathaway.com/letters/1987.html

“We try to price, rather than time, purchases. In our view, it is folly to forego buying shares in an outstanding business whose long-term future is predictable, because of short-term worries about an economy or a stock market that we know to be unpredictable. Why scrap an informed decision because of an uninformed guess?

We purchased National Indemnity in 1967, See's in 1972, Buffalo News in 1977, Nebraska Furniture Mart in 1983, and Scott Fetzer in 1986 because those are the years they became available and because we thought the prices they carried were acceptable. In each case, we pondered what the business was likely to do, not what the Dow, the Fed, or the economy might do. If we see this approach as making sense in the purchase of businesses in their entirety, why should we change tack when we are purchasing small pieces of wonderful businesses in the stock market?”

1994 Letter to Berkshire Hathaway shareholders
http://www.berkshirehathaway.com/letters/1994.html

“We are not concerned with whether the market quickly revalues upward securities that we believe are selling at bargain prices. In fact, we prefer just the opposite since, in most years, we expect to have funds available to be a net buyer of securities. And consistent attractive purchasing is likely to prove to be of more eventual benefit to us than any selling opportunities provided by a short-term run up in stock prices to levels at which we are unwilling to continue buying.”
1978 Letter to Berkshire Hathaway shareholders
http://www.berkshirehathaway.com/letters/1978.html

“The art of investing in public companies successfully is little different from the art of successfully acquiring subsidiaries. In each case you simply want to acquire, at a sensible price, a business with excellent economics and able, honest management. Thereafter, you need only monitor whether these qualities are being preserved.”
1996 Letter to Berkshire Hathaway shareholders
http://www.berkshirehathaway.com/letters/1996.html

“Our equity-investing strategy remains little changed from what it was fifteen years ago, when we said in the 1977 annual report: "We select our marketable equity securities in much the way we would evaluate a business for acquisition in its entirety. We want the business to be one (a) that we can understand; (b) with favorable long-term prospects; (c) operated by honest and competent people; and (d) available at a very attractive price." We have seen cause to make only one change in this creed: Because of both market conditions and our size, we now substitute "an attractive price" for "a very attractive price."”
1992 Letter to Berkshire Hathaway shareholders
http://www.berkshirehathaway.com/letters/1992.html

“If you’re an investor, you’re looking at what the asset – in our case, businesses – will do. If you’re a speculator, you’re primarily forecasting on what the price will do independent of the business.”
Outstanding Investor Digest, August 8, 1997, p. 14

“My favorite time frame for holding a stock is forever.”
“Striking Out on Wall Street,” US News and World Report, June 20, 1994, p. 58

“We will continue to ignore political and economic forecasts, which are an expensive distraction for many investors and businessmen. Thirty years ago, no one could have foreseen the huge expansion of the Vietnam War, wage and price controls, two oil shocks, the resignation of a president, the dissolution of the Soviet Union, a one-day drop in the Dow of 508 points, or treasury bill yields fluctuating between 2.8% and 17.4%.

But, surprise - none of these blockbuster events made the slightest dent in Ben Graham's investment principles. Nor did they render unsound the negotiated purchases of fine businesses at sensible prices. Imagine the cost to us, then, if we had let a fear of unknowns cause us to defer or alter the deployment of capital. Indeed, we have usually made our best purchases when apprehensions about some macro event were at a peak. Fear is the foe of the faddist, but the friend of the fundamentalist.”

1994 Letter to Berkshire Hathaway Shareholders
http://www.berkshirehathaway.com/letters/1994.html
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No. of Recommendations: 2
Actually, it has led me to abandon valuation and business modeling entirely, at least until the importance of valuation and business models make a comeback

And what will make that happen?

...


If technical trading is working for you now, does that mean it will continue to work for you?


Those are the questions, all right: when to use value investing and when to use technical strategies. Sorry, no answers here :-(.

-Mike
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No. of Recommendations: 2
Value investing requires a different mentality.

That's certainly right. Every style of investing (or trading or what have you) requires a well-matched mentality, and a strategy that provides an edge in generating a better probability distribution of future stock price than most others can. Buffett has both of these nailed, as did Graham and others, although equally important to note is not just the mechanics of what they do, but that every one has a different combination that works best for them.

-Mike
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No. of Recommendations: 2
Those are the questions, all right: when to use value investing and when to use technical strategies. Sorry, no answers here :-(.

IMO, one of the least utilized but probably optimal approach is actual strategy diversification. No reason one has to be 100% all-in on any particular approach.
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No. of Recommendations: 9
I have not done any studies but have been banging my head for a couple
of years now why valuation methods that seem to have worked reasonably
well previously (i.e. a portfolio constructed of undervalued stocks
generally increases in price over a reasonable time period) no longer do, at least as well.


Another simpler explanation is that it never did work that well---
if you including "all the time" in the definition of working.
Value investing is extraordinarily tax efficient, works extremely well on
average over the years with low risk, and often has 3 years in a row that
it underperforms most other kinds of investing, including index tracking.
All this should be understood going in.

At some point the tide will turn again, and we'll see good quality
merchandise at high prices and junk at low prices.
It seems odd that Tesla is trading at 15x book, Goldman is at book,
and Bank of America is at half book. (not that I'm implying that BAC
is very good quality merchandise). But alas, we must wait.

As the man says, it's not complicated, but it's hard.

Jim
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No. of Recommendations: 0
But in the meantime, for the last couple of months I have been doing strictly technical based trading, and I have had excellent results far exceeding what I would have gotten with any fundamental-based strategy I am aware of.

I'm surprised. I had always put you squarely in the technical trading skeptics camp.

Mark
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No. of Recommendations: 1
I'm surprised. I had always put you squarely in the technical trading skeptics camp.

Charlie: "Any year that passes in which you don't destroy one of your best loved ideas is a wasted year."

The problem of course is finding a method that actually works. I just never stopped looking.

-Mike
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