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Hi Everybody,

This thread brings up possibly one of the most interesting aspects of Graham like value investing. Namely the importance of temperment and attitude.

Mr. Buffett has often said that the technical knowledge needed to successfully invest is minimal but the discipline needed is enormous. Graham often talks about the temperment needed when going against the crowd. And Peter Lynch (whose books I'm reading again for probably the first time in about 10 years and feel they are an excellent companion to II) says that successful investing is more a matter of the stomach than head, or having the gumption to buy what others overlook.

One of the major psychological cons of being a value investor was described perfectly on this thread, the frustration in trying to talk a common language with market participants who aren't Graham like value oriented investors. Mr. Buffett has indicated that he thinks a person either naturally takes to Graham's views or they don't. I might tend to agree.

Personally most of the time when I deal with people and the talk evolves to the market, I generally have a couple of standard picks, even in the most overbought areas, that are at least somewhat reasonably priced and I feel comfortable suggesting they might look at.

For instance, in the oil & gas area, I think MRO looks reasonable. Not cheap enough for me to buy now but reasonable enough for me to feel comfortable advising a relative or so that is gung-ho on getting in the energy sector. Suggestions like these also offer the opportunity to back them up with an earnings based or asset based rational that not only defends the suggestion but also may impress the suggestee that you have an above average amount of financial acumen. (However, I found that at social events typically an overly long financial rational of a pick merely results in receiving a vacant stare and a quick end to the conversation.)

On the plus side of this equation, the knowledge about the reasonably priced companies in the hot area's might offer a head start in finding the bargains when that hot area eventually cools off. And related to the general concept of either being a value investor or not, there is a certain psychological benefit to believing that with an appropriate value methodology and a minor factor of good fortune, one has the potential of creating significant wealth via a business appraoch versus a gambling activity.

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