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Author: anuragupta Big gold star, 5000 posts Top Favorite Fools Old School Fool Ticker Guide CAPS All Star Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5162  
Subject: Re: Congratulations GG Team - Now get to work! Date: 5/9/2009 4:22 PM
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IMO:

Market is fair valued today. There is no need to hurry. The need for hurry was during the periods when market was below DOW 7K. I have to say that I am amazed at how all TMF newsletters sold a disproportionately higher number of stocks at the market bottom. But they stuck to their principle of supplying only 2 recs per month and only at the designated time rather than making exceptions to take advantage of market conditions.

I find MDP and HG as two ludicurous (basket) cases. I am afraid to post this elsewhere for the fear of getting clobbered. MDP started with market 10-20% off its highs and put all the money in SPY. Then they sold a whole bunch of stocks indiscriminately, some of which have now tripled. HG started its portfolio service at the market bottom and decided to keep 95% of its investment in cash! PD was of course closed at the market bottom while its stocks recover at a furious pace. GG sold its auto stocks at the bottom of the global auto market. Even inherently bad auto companies have recovered since then. II sold dozens of stocks at the market bottom causing those subscribers who followed its advice permanent loss of serious amount of capital. I am glad I did not fall into this mess but at the same time did see in practice how never to invest and how other people can serious destroy one's wealth regardless of their credentials.

Overall GG (as well as HG) has done well since the departure of Bill Mann by recommending far better picks. Picks by Nathan and Tim are quite mature and based on business fundamentals rather than some vodoo understanding of esoteric cultural aspects. I am really happy with MPEL's recovery as I am now 15% in green since I chased it right down to its bottom cursing myself all the while. I will be lighting up next week in a big way to bring MPEL in line with my risk adjusted portfolio. I was far comfortable in chasing down PDS than MPEL despite so much dilution in PDS.

One of the things that this downturn has taught be is that most leveraged financials are inherently risky businesses as even the institutions that run them don't understand them well enuf. I losted a serious amount of my invested capital (14%) in TMF recommended financials. I have recouped some of that loss so far by investing in higher quality firms like OXPS, SCHW and USB. Of these USB is again much harder to understand as it is a bank. GG had PRS, FNDT and AIB among its financials that have caused investors serious losses. I hope advisors have learnt their lessons well.

Firms like CGA are rather risky and deserve smaller than usual investment size. I would say this even if it turns out to be a 20 bagger in the next decade. I hope GG adapts itself to do partial buy and partial sells without creating GG into a portfolio service. Partial buys and sells can be nicely accomodated in the current score card.

Most TMF advisors are quite young and do not have the experience of investing in several market cycles. I hope the advisors at various TMF newsletters inculcate a habit of long term (5+ years) buy and hold for all their picks as per the original TMF philosophy of 5 years ago. Stocks should be selected that have to potential to be kept at that level. Others can form a trading or a watch list of stocks. GG like other newsletters will soon reach a level where the score card has too many stocks to be regularly followed by the existing staff on TMF team. GG team should plan ahead and device a plan to delegate picks older than 2 years to a group of board members instead to track on their own. That will allow GG team to concentrate their resources on studying the best opportunities better.

Anurag
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