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Author: jin210 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 6722  
Subject: Roth Portfolio Management Advise... Date: 4/14/2002 8:37 PM
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Hi,
I'm thinking about putting my Roth IRA money into VFINX (Vanguard S&P 500 Index) and VFIIX (Vanguard Ginnie Mae Fund). Please remember that it is for my retirement money, which is very very long term. I'm currently 23 yrs old so another 37 yrs until I can touch that money.

Even if I learned about mutual fund investing, I would feel more comfortable just letting my retirement money sit in index and fixed incom funds. In next 30-40 years, I don't think I can pick actively managed funds that will beat VFINX. Maybe VFIIX though. If you think differently, please share your thougths.

I'm thinking, either 100% in VFINX or 70% in VFINX and 30% in VFIIX. I'm leaning more towards 100% VFINX because, in the long run, VFINX overperformed VFIIX.

Basically, I want to know what people think about this strategy. Also, whether VFIIX is a good idea for stability or if there are other fixed income funds out there which provide better returns with similar risk.

jin
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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4319 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/14/2002 10:35 PM
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Basically, I want to know what people think about this strategy. Also, whether VFIIX is a good idea for stability or if there are other fixed income funds out there which provide better returns with similar risk.

My advice to you: don't invest in fixed income funds. You are way too young. You will give up a lot of performance for virtually no decrease in risk (considering the very long time period you are talking about).

You might want to find a small cap index to complement your S&P 500 index.

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Author: greenmartian1 Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4320 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/14/2002 11:08 PM
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Agree with MadCap.  In the end, based on where rates are right now and
just guessing where they will be 40 years from now, you will be lucky
to earn the coupon.  Or course, maybe rates go to 1% one day.  Who 
knows, but despite all the issues with equities time suggests that you
put most of your money there.

I'd also consider a small cap index fund.  If you are feeling brave,
you can even try to overbalance one area (large cap vs. small cap) 
based on which one has been doing the best or worst over time.  

Here is some data fwiw:

yr      LC      SC

79	18.44	43.09
80	32.42	38.58
81	-4.91	2.03
82	21.41	24.95
83	22.51	29.13
84	6.21	-7.3
85	31.23	31.05
86	18.06	5.68
87	4.71	-8.77
88	16.22	24.89
89	31.36	16.24
90	-3.32	-19.51
91	30.22	46.05
92	7.42	18.41
93	9.89	18.91
94	1.18	-1.82
95	37.45 	28.44 
96	22.88	16.49
97	33.19	22.36
98	28.62	-2.55
99	21.06	23.13
2000	-9.06	-2.67
2001	-12.02	3.1

The latest annualized numbers end of 01:

3Year	-1.1%	7.3%
5Year	10.7%	8.1%
10Year	12.8%	11.8%
15Year	13.6%	10.9%
20Year	12.9%	11.1%

Back when I used funds I would try to overbalance one area if
annualized returns in one got out of hand vs. the other.  To
take a good example, consider the annualized returns end of 98:

3Year	28.2%	11.6%
5Year	24.0%	11.9%
10Year	19.0%	12.9%
15Year	17.7%	11.2%

In other words, the SP500 was smoking the small companies.  
Eventually you had to figure this would change.  It has.
Of course, this is a less than precise way to view these indexes
but I think the data can help you realize when one area 
MIGHT be slighly more attractive than the other.

Just some thoughts.  I don't use funds anymore fwiw and
abandoned this approach several years ago.  But again - I still
think the trends are worth monitoring.



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Author: TheVlad Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4321 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/15/2002 11:58 AM
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In next 30-40 years, I don't think I can pick actively managed funds that will beat VFINX.

30-40 years is a lot of time during which you can learn pretty much anything you want to put your mind to. Including how to select actively managed funds that would beat S&P500. You will probably have to shift your money around periodically but you could do it if you really want to learn how to manage your money properly.

So, I think it is the first question you have to answer for yourself - do you really want to know how to manage money.

If you want to put money into Vanguard, remember that they offer all kinds of funds based on different capitalizations, sectors, etc. They are not offering only S&P500 fund.

If you are interested in becoming educated about markets, you may want to consider putting your money in their money market or short-term bond fund for now while you are learning and then shift the money into a more appropriate fund(s) later once you know how to figure out what is working in the market at any given time.

If you really don't care about learning this, then the best thing you can do is to find a good money manager and give your money to that manager. Picking some fund at random (and that's what you are doing now) is more of a gambling proposition as you really don't know if this fund will continue its historical performance into the future.

Hope this helps,

V.

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Author: PosFCF Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4322 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/15/2002 12:18 PM
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TheVlad

Good advice!

PosFCF

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Author: joebedford Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4323 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/15/2002 1:11 PM
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Then how come this is a trick that many (if not most) financial professionals can't pull off? Also, how much do you have to beat the S&P by to make up for the extra costs, vs. what you would spend on an S&P index fund?

Thanks!
Joe


Including how to select actively managed funds that would beat S&P500.

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Author: greenmartian1 Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4324 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/15/2002 1:30 PM
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Then how come this is a trick that many (if not most) financial professionals can't pull off?

Anybody with a value tilt - at least in the past 5 years - hasn't had much problem with the SP500, though that outperformance is a result of the past 3 years. Those in smaller cap value stocks have crushed the SP500...

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Author: Ringfinger Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4325 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/15/2002 1:36 PM
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Good point!

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Author: joebedford Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4326 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/15/2002 6:42 PM
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My investment time horizon is thirty years, not three or five. :-)

Thanks!
Joe


Then how come this is a trick that many (if not most) financial professionals can't pull off?

Anybody with a value tilt - at least in the past 5 years - hasn't had much problem with the SP500, though that outperformance is a result of the past 3 years. Those in smaller cap value stocks have crushed the SP500...


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Author: greenmartian1 Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4327 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/15/2002 6:54 PM
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My investment time horizon is thirty years, not three or five. :-)

Of course. But the suggestion is that active managers can't beat the SP500. That's absurd. Of course, I'm biased. Most of the popularity of index funds - particularly the SP500 - peaked with stunning performance. That's no more than trend following too. Your original post is a reflection of that - nobody in their right mind would use a fixed income fund for the type of time horizon listed considering where rates are today unless you are looking at this with a rear view mirror. If rates had headed up the past few years it is likely you wouldn't have brought it up as a choice. The same is true with the SP500. As the index continues to sink into the mud, it will go out of favor likely at the very time when investors should stay the course.
And no offense - but I know few investors who can stand dismal performance over a 5 year period. Fund flows clearly show how many performance chasers there are. You can see examples of that sort of thing even today. Hopefully you are made of sterner stuff.

My real suggestion is this - learn everything you can from your TLB experience and begin to apply to this that TLB the stock and the entire industry. Picking retail stocks is far easier and profitable than picking indexes.



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Author: greenmartian1 Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4328 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/15/2002 8:18 PM
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My real suggestion is this - learn everything you can from your TLB experience and begin to apply to this that TLB the stock and the entire industry.

correction: An alternative suggestion is this - learn everything you can from your TLB experience and apply that knowledge to TLB the stock and then to the rest of the industry.

(I tend to go off-course in anything longer than a couple lines)

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Author: PosFCF Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4329 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 8:20 AM
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joebedford

My investment time horizon is thirty years, not three or five. :-)

Any good long-term planning has review processes built into them. A yearly review is not too frequently for financial planning. At any of those reviews the allocation strategy may be ammended to include more options (diversification), to rebalance the weightings(due to performance of the sectors and/or age considerations), to factor in other variables (like college planning, estate planning, etc), to increase contribution amounts, etc.

You say you know nothing about the market, then I ask why aren't you consulting someone who does? Making a plan to invest in this or that type of fund may or may not be sound decision making for your particular situation, but how will you know without consulting a professional? When I was much younger I thought that all professionals were too expensive for me to use, I later discovered that it was much more expensive not to.

One could say (and I believe several have) that a monkey throwing darts at the list of traded companies could do better than a lot of "money managers". No matter how amusing the concept, I suspect I'll never turn my retirement outlook over to a monkey with a dart.

Ask around, ask some successful people you admire who they would suggest as a financial professional you could consult with. It will be worth the effort in the long run.

PosFCF



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Author: joebedford Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4330 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 9:02 AM
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But the suggestion is that active managers can't beat the SP500.

What I meant to suggest is that many, if not most, active managers cannot beat the S&P 500 over the long term, especially if costs are taken into account.

Most of the popularity of index funds - particularly the SP500 - peaked with stunning performance. That's no more than trend following too.

If one has invested in an index fund because they are following a trend, then they are doing the right thing for the wrong reason. :-)

Your original post is a reflection of that - nobody in their right mind would use a fixed income fund for the type of time horizon listed considering where rates are today unless you are looking at this with a rear view mirror. If rates had headed up the past few years it is likely you wouldn't have brought it up as a choice.

An S&P 500 index fund is not a "fixed income fund". I am talking about apples, and you are talking about oranges.

And no offense - but I know few investors who can stand dismal performance over a 5 year period. Fund flows clearly show how many performance chasers there are. You can see examples of that sort of thing even today.

I am not arguing that point. The original poster was asking for investment advice. If the advice I gave is contrary to what most investors would do, all the better.

Picking retail stocks is far easier and profitable than picking indexes.

Oh dear, now that's a whole 'nother discussion, ain't it? ;-) I say go for index funds as your core. Pick stocks to add a little flavor only if you're so inclined.

Thanks!
Joe


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Author: greenmartian1 Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4331 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 9:16 AM
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An S&P 500 index fund is not a "fixed income fund". I am talking about apples, and you are talking about oranges.

Actually, I had you and the original poster confused. He mentioned the fixed income fund in addition to the SP500 fund, not you (obviously).

If it matters, you are missing my underlying point - namely, that there is no particular reason to favor the SP500 over other areas in the market (the SP500 is a market cap weighted fund whose 58 BILLION dollar median market cap makes it far different than the vast majority of funds or stocks out there) unless an investor is influenced by past performance. Because the SP500 has done well over - say - smaller companies in the past 5 or 10 years isn't necessarily a logical reason to favor it over the other indexes. The last 3 years have shown that. After all, you can get the advantages of an index fund - low expenses, somewhat low turnover - in other index funds.

Of course, most index zealots have no conception what they are targeting anyway...


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Author: joebedford Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4332 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 9:25 AM
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Any good long-term planning has review processes built into them. A yearly review is not too frequently for financial planning. At any of those reviews the allocation strategy may be ammended to include more options (diversification), to rebalance the weightings(due to performance of the sectors and/or age considerations), to factor in other variables (like college planning, estate planning, etc), to increase contribution amounts, etc.

I am trying to figure out why you think I would disagree with this. :-)

You say you know nothing about the market, then I ask why aren't you consulting someone who does? Making a plan to invest in this or that type of fund may or may not be sound decision making for your particular situation, but how will you know without consulting a professional? When I was much younger I thought that all professionals were too expensive for me to use, I later discovered that it was much more expensive not to.

I never said or even implied that I know nothing about the market. I can't figure out where you got that from. I am very market savvy. As to consulting with professionals, that goes against one of the core philosophies of the Fool itself.

One could say (and I believe several have) that a monkey throwing darts at the list of traded companies could do better than a lot of "money managers". No matter how amusing the concept, I suspect I'll never turn my retirement outlook over to a monkey with a dart.

But you will turn it over to the "professional money manager" whose portfolio did not perform as well as the monkey's???

Ask around, ask some successful people you admire who they would suggest as a financial professional you could consult with.

I did. That is one of the reasons I am managing my own affairs. :-D

Thanks!
Joe





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Author: joebedford Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4333 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 9:32 AM
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If it matters, you are missing my underlying point - namely, that there is no particular reason to favor the SP500 over other areas in the market (the SP500 is a market cap weighted fund whose 58 BILLION dollar median market cap makes it far different than the vast majority of funds or stocks out there) unless an investor is influenced by past performance. Because the SP500 has done well over - say - smaller companies in the past 5 or 10 years isn't necessarily a logical reason to favor it over the other indexes. The last 3 years have shown that.

What else should you be influenced by other than past performance??? Of course you should look at past performance, but over the very long term. I don't want to hear about three years or five years or ten years. Those timeframes hold no relevance to me. If they hold relevance to you, than you should be in bonds anyway.

After all, you can get the advantages of an index fund - low expenses, somewhat low turnover - in other index funds.

Erm, I thought we were comparing S&P index funds to actively managed funds? I can't win this debate if you keep changing the rules. ;-) I did not mean to suggest that S&P index funds specifically are the be-all and end-all. They are not a bad core investment, however.

Of course, most index zealots have no conception what they are targeting anyway...

That may be true, but you know what? If they are that passive, then there are a lot worse things they could do than dollar cost average into an index. =)

Thanks!
Joe


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Author: joebedford Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4334 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 9:40 AM
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Oops, I just looked at your profile...and your occupation. Oh well, I think you admitted a bias at some point. :-)

Thanks!
Joe
But I really like ELO! :-)

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Author: greenmartian1 Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4335 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 9:40 AM
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Of course you should look at past performance, but over the very long term. I don't want to hear about three years or five years or ten years. Those timeframes hold no relevance to me. If they hold relevance to you, than you should be in bonds anyway.

I'm not in the business of fixed income. Or index funds. Or funds.
Thank goodness...

Erm, I thought we were comparing S&P index funds to actively managed funds? I can't win this debate if you keep changing the rules.

Many actively managed funds suck! We agree on that one.

They are not a bad core investment, however.

Agree.

If they are that passive, then there are a lot worse things they could do than dollar cost average into an index.

A great point!

We aren't that far away on this. I'm only suggesting the original poster consider other options. But I have to admit:

I don't want to hear about three years or five years or ten years. Those timeframes hold no relevance to me.

10 years? That's BS. Admit it!

:)







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Author: joebedford Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4336 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 9:45 AM
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Now WAIT just a dang minute...are GreenMartian and PosFCF the same person? Your profiles are uncannily similar--you both work in finance, you both like the Beatles and Moody Blues, both of your quotes revolve around the concept of stupidity...

Not to mention both of you posted on this thread, and that your positions are similar. Either there's a doppelganger in our midst, or you two need to get together and have a beer. :-D

Thanks!
Joe

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Author: joebedford Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4337 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 9:47 AM
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I'm not in the business of fixed income. Or index funds. Or funds.
Thank goodness...


So what would be your investment advice for a 60-year-old preparing to retire?

10 years? That's BS. Admit it!

I admit NOTHING! :-)

Thanks!
Joe



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Author: greenmartian1 Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4338 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 9:51 AM
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So what would be your investment advice for a 60-year-old preparing to retire?

My crystal ball doesn't work. Thankfully, I'll leave asset allocation decisions to others.

I have a dopper (goodmarket) but haven't used him for a LONG time...


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Author: greenmartian1 Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4339 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 9:51 AM
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wow, POSFCF is my kinda dude!

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Author: TheVlad Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4340 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 11:24 AM
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What else should you be influenced by other than past performance???

Hmmm...current performance? Market always changes what it is favoring. If you go by past performance, you'd be most likely investing into the underperforming securities. You have to stay nimble and attuned to the market.

I think Vanguard can be a good place for a retirement fund becase they offer such a variety of options. You can easily move from fund to fund based on capitalization and how it is favored in the market and also split your assets between the best performing sectors. You also have access to bond funds and money market funds because sometimes being in cash is the best option of all.

Right now being in a S&P500 fund subjects you to underperformance. You are much better off in a small or a mid cap fund. Once the market changes and starts favoring large caps again, you should move into S&P500 fund.

Of course, it involves market timing but if you are a serious student of the markets it should not be a problem. Actually, in terms of capitalization, it is rather easy to determine which one is favored. Investor's Business Daily every day shows you relative performance of large cap funds vs. small cap funds.

When you say that your time horizon is 30-40 years, you are making predictions of your own future. How wise is it? How do you know for sure that you won't need the retirement money earlier? You simply don't. So, your first and foremost thought should be to preserve your capital and second is to invest it in the most advantageous way at any given slice of time.

Remember that studies show that 80% of the equity performance are determined by its sector and overall market and only 20% by the choice of equity itself. Since we are talking about index funds, you are going against the market when you select the index which is out of favor as you essentially guarantee the underperformance. Don't fight the market, join it. Once you do, you will really like the results.

V.

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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4341 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 12:00 PM
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PosFCF,

What does "FCF" stand for?

What do your profile mean when it says your job is an "investor/speculator"?

I later discovered that it was much more expensive not to [hire a Wise financial consultant]
How did you discover this?


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Author: greenmartian1 Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4342 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 12:03 PM
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pos free cash flow

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Author: PosFCF Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4343 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 12:29 PM
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joebedford

I made the same mistake as someone else, my post was intended for jin210.

PosFCF
One could say (and I believe several have) that a monkey throwing darts at the list of traded companies could do better than a lot of "money managers". No matter how amusing the concept, I suspect I'll never turn my retirement outlook over to a monkey with a dart.

Joe
But you will turn it over to the "professional money manager" whose portfolio did not perform as well as the monkey's???


If I can't choose a "professional money manager" whose performance is better than the monkey, then I might as well choose the monkey, at least I have a conversation piece! :~)

As to consulting with professionals, that goes against one of the core philosophies of the Fool itself.

Being well-informed does not necessarily mean that one wants to spend the time on research and numbers crunching. IMO one can be be Foolish and use professionals.

Again, I apologize for misdirecting the post intended for jin210

PosFCF

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Author: PosFCF Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4344 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 12:37 PM
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joebedford

Now WAIT just a dang minute...are GreenMartian and PosFCF the same person? Your profiles are uncannily similar--you both work in finance, you both like the Beatles and Moody Blues, both of your quotes revolve around the concept of stupidity...

Not to mention both of you posted on this thread, and that your positions are similar. Either there's a doppelganger in our midst, or you two need to get together and have a beer. :-D


It's really funny that I read your post about looking at greenmartians profile and then looked at your and theirs. I saw Justin Hayward as one of the people greenmartian would like to meet and said to myself: "Hmmm, I ought to meet this person"....then I came back to this thread and read your message!

For the record, no I have no other "nicks" on The Fool, but I will admit to not only a similarity, but more of one than even shows on the profile!

PosFCF



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Author: PosFCF Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4345 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 12:46 PM
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jrr7

What do your profile mean when it says your job is an "investor/speculator"?

It means that I make my living from what gains I capture from investing and speculating in the market.

I use the terms "investing" and "speculating" pretty much as Benjamin Graham used them in Security Analysis.

I later discovered that it was much more expensive not to [hire a Wise financial consultant]
How did you discover this?


Very expensively! School of Very Hard Knocks!

PosFCF

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Author: greenmartian1 Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4346 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 12:50 PM
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Just a fwiw...in case you haven't seen it:

Hayward/Moodys Rarities:

http://www.justinhayward-thismorning.com/rarities/index.html

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Author: joebedford Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4347 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 4:34 PM
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Of course, it involves market timing but if you are a serious student of the markets it should not be a problem.

Then how come most can't do it? Or, if you like, if it's so easy why isn't everybody doing it? But if everybody did it, you wouldn't want to do it...

Now my head hurts. :-)

Thanks!
Joe

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Author: TheVlad Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4348 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 4:42 PM
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Then how come most can't do it? Or, if you like, if it's so easy why isn't everybody doing it?

I said - if you are a serious student of the markets. That's the key part as it involves a lot of hard work. Very few are willing to work that hard. That's why very few people do it. But if you are willing to work hard, you can learn how to do it in a reasonable fashion. Enough, at least, to be able to see the main trends in the market in terms of sectors, capitalization, etc. and their changes.

V.

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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4349 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 7:05 PM
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I said - if you are a serious student of the markets. That's the key part as it involves a lot of hard work. Very few are willing to work that hard. That's why very few people do it. But if you are willing to work hard, you can learn how to do it in a reasonable fashion. Enough, at least, to be able to see the main trends in the market in terms of sectors, capitalization, etc. and their changes.

Two of arguably the best investors that have ever existed -- Warren Buffett and Peter Lynch -- both admit to not being able to time the market. With how intelligent these guys are and how hard they work (both are essentially workaholics), I would say my own chances of success in market timing aren't too good. And considering market timing is completely unnecessary to getting excellent results, I can't comprehend why I should bother.

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Author: TheVlad Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4350 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 7:25 PM
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Two of arguably the best investors that have ever existed -- Warren Buffett and Peter Lynch -- both admit to not being able to time the market. With how intelligent these guys are and how hard they work (both are essentially workaholics), I would say my own chances of success in market timing aren't too good.

I don't want to argue about Buffet. I would just note that his style of "investing" is unique. He is into buying businesses and not in the sense that you may think as in looking at the purchase of stock as buying a piece of a business. No, he's literally into buying businesses either outright or in significant chunks which guarantees him that nothing would happen at the company without his approval. That's a totally different proposition for which market timing is not crucial.

And considering market timing is completely unnecessary to getting excellent results, I can't comprehend why I should bother.

And how do you exactly figure that to be true?

I mentioned research that shows that fundamentals of the company influence only 20% of the changes in price with the rest (80%!) influenced by overall market and the sector the company is in.

So, again, how timing is completely unnecessary?

V.


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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4351 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 10:10 PM
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I don't want to argue about Buffet. I would just note that his style of "investing" is unique. He is into buying businesses and not in the sense that you may think as in looking at the purchase of stock as buying a piece of a business. No, he's literally into buying businesses either outright or in significant chunks which guarantees him that nothing would happen at the company without his approval. That's a totally different proposition for which market timing is not crucial.

“As our history indicates, we are comfortable both with total ownership of businesses and with marketable securities representing small portions of businesses. We continually look for ways to employ large sums in each area. (But we try to avoid small commitments - “If something's not worth doing at all, it's not worth doing well”.) Indeed, the liquidity requirements of our insurance and trading stamp businesses mandate major investments in marketable securities.”
- 1981 Letter to Berkshire Hathaway shareholders
http://www.berkshirehathaway.com/letters/1981.html

“We really don't see many fundamental differences between the purchase of a controlled business and the purchase of marketable holdings such as these. In each case we try to buy into businesses with favorable long-term economics. Our goal is to find an outstanding business at a sensible price, not a mediocre business at a bargain price.”
- 1987 Letter to Berkshire Hathaway shareholders
http://www.berkshirehathaway.com/letters/1987.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

“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

I mentioned research that shows that fundamentals of the company influence only 20% of the changes in price with the rest (80%!) influenced by overall market and the sector the company is in.

So, again, how timing is completely unnecessary?


“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


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Author: hobaby One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4352 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 10:18 PM
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(I said - if you are a serious student of the markets. That's the key part as it involves a lot of hard work. Very few are willing to work that hard. That's why very few people do it. But if you are willing to work hard, you can learn how to do it in a reasonable fashion. Enough, at least, to be able to see the main trends in the market in terms of sectors, capitalization, etc. and their changes.)



SOUNDS LIKE A FULL TIME JOB TO ME!

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Author: TheVlad Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4353 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 10:53 PM
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SOUNDS LIKE A FULL TIME JOB TO ME!

Pretty much.

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Author: TheVlad Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4354 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/16/2002 11:05 PM
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Quite an essay!

So, what does it prove?

That Buffet is successful? I know it already.

Does it prove that anyone can replicate his success? I don't think so.

If you think it does that, show me how.

All you do is quote from his writings. Where is your own thinking?

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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4355 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/17/2002 10:27 AM
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Some people are UNABLE to market-time properly due to:

- lack of discipline
- lack of research
- lack of quickness in critical situations
- lack of access to necessary information
- lack of access to a broker
- lack of time to do all the above!

Unfortunately, some people think they have plenty of these, and find out too late. One is not an accurate judge of oneself.

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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4356 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/17/2002 5:13 PM
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Does it prove that anyone can replicate his success? I don't think so.

Does it *prove* that *anyone* can replicate his success? No. How do you propose that we go about doing this?

All you do is quote from his writings. Where is your own thinking?

Why should I bother? If you won't listen to Buffett, you certainly won't listen to me.

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Author: joebedford Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4357 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/18/2002 10:29 AM
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"MadCapitalist added to your Favorite Fools list."

:-)

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Author: TheVlad Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4358 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/18/2002 12:55 PM
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Me: "All you do is quote from his writings. Where is your own thinking?"

MadCapitalist: "Why should I bother? If you won't listen to Buffett, you certainly won't listen to me."

Oh, thee of little faith... I would rather listen to your own reasoning than to quotes from Buffet as if his writings were a new form of scripture or something.

You quoted Buffet in a previous post as saying, "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?"

In your mind that blew away all of my suggestions of trying to be in tune with the market and acting accordingly.

But let's reason here for a little bit.

Any day of the week you can run some value screen which will pop up lots of stocks that are ideal from the value point of view. They trade below book value, have low PEs, have cash, have earnings, etc., etc. And yet the market values them very low.

Do you think the market is stupid and can't see a good thing for what it is? If you think so, you'd be wrong more times than it is healthy for your portfolio.

So, what do we do? Buy one of these stocks and wait for the market to recognize its value? Well, we can be waiting 10 years, 20 years with no results at all. Even if the price stays the same, we would be losing money because of the time value.

Is that how you think Buffet makes his investments? Goes by price and buys stock in these companies? Wrong. He buys stocks in the companies that are highly valued by the market for a good reason. He just buys them at the moment of an extreme pricing inefficiency usually caused by massive changes in the investor's psychology. All of his highly publicized investments in KO, AXP, etc. happened after big market crashes when everyone was selling and the prices were bid down to unbelievable values.

Well, if it is not timing then what is it?

If you re-read his quote you will see that is what he is saying. We have a strong company with a strong stock which became suddenly mispriced because the market crashed and economy looks bleak. We should buy it as these events are likely to pass. It is timing in my book. That's certainly was what everyone who was smart and had cash did at the time. And how did these people had all that cash? Well, because they recognized that the market was overvalued and topping and they sold their investments and then waited for the crash to buy back at better prices.

He will never buy a company just because it is trading at levels cheaper than those implied by all your typical value metrics. He is interested only in strong companies properly valued by the market in general but at the times when their market values change irrationally.

Anyway, I hope that you see how a little bit of reasoning could change the perspective.

You can never take Buffet blindly at his word. You always have to ask yourself what does he mean exactly. Otherwise, you will be rather unsuccessful trying to aplly his tenets as you will act only at the superficial level.

Having said all of that, I would again emphasize that Buffet primarily likes to buy businesses rather than buy chunks of them in the form of stock.

So, if you want to invest like Buffet, your best bet is to buy stock in Berkshire and let the man do his job. You are simply ill-equipped as an individual investor to emulate his style. You can only superficially imitate his style.

Vlad

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Author: greenmartian1 Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4359 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/18/2002 1:26 PM
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Do you think the market is stupid and can't see a good thing for what it is?

Usually, yes.

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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4360 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/18/2002 5:49 PM
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Oh, thee of little faith... I would rather listen to your own reasoning than to quotes from Buffet as if his writings were a new form of scripture or something.

What should I do when my reasoning agrees with Buffett's? (which is almost always the case) Should I waste my time re-writing in my own words concepts that Buffett has already eloquently stated? I don't see the need to reinvent the wheel.

I don't understand you. Did you really think I would have quoted Buffett if I didn't agree with his reasoning?

I should have tested you. I should have quoted Buffett without telling you it was a quote, just to see what you would have thought about "my" reasoning.

Well, if it is not timing then what is it?

Like Buffett said, it is "pricing" his purchases, not "timing" them. If Buffett likes a company and it is priced attractively compared to the intrinsic value, then he buys *now* (assuming cash is available and he has no better opportunities right now). He doesn't time the market. He doesn't try to decide if the stock will go up or down in the next few months. He just decides whether the price is attractive compared to the value *now*, because as he admitted, he doesn't know what the market will do.

Am I the only one who understands this simple concept?

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Author: CashPhlo Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4361 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/18/2002 5:59 PM
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Was passing through and decided to give my thoughts, for what it's worth:

I don't think there is anything wrong with saying that Buffett has used market timing to make some of his stock purchases. I know that the word "market timing" is considered taboo among most value investors, but I don't see why. Ben Graham's story of "Mr. Market" that he told Buffett when Buffett was a student at Columbia is a quintessential tale of market timing. The moral of tale was that as an investor you can always say "no" to Mr. Market until he comes to you with a price you like.

Anyone who follows Buffett knows that he will buy high quality companies only when the market prices them at some ridiculous level. It just so happened that many of his major purchases coincided with market crashes, particularly in the early 70s and 1987. Buffett dissolved his partnership in 1969 precisely because he thought the overall market was getting too expensive. Sure enough in 1973 he was right and soon when the market hit bottom, he was buying again. Today, Buffett talks about the general market more now than ever before when he warns of the overvaluation of large-cap stocks.

As GM pointed out with his index links, there is nothing wrong with an investor paying attention to what is working in the market currently. If you invest primarily in small-cap value stocks, it makes sense to see if these stocks are out-of-favor or not to determine whether your own performance was really that great (i.e., your investment strategy worked) or was it really more influenced by the market trend.

BTW, I don't think that only 20% of a stock's performance is determined by its own fundamentals. I read somewhere that 40% of a stock's performance is determined by the company's performance, 30% by the performance of the industry/sector, and 30% by the overall market. I don't know how true that is or not, but this seems more plausible than the 80% influence that was mentioned.

In the end, making money is all that counts. And if you do that by "timing the market" or not, it doesn't matter. As they say, "There are many roads to heaven".

All the best,

CashPhlo


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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4362 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/18/2002 6:40 PM
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I don't think there is anything wrong with saying that Buffett has used market timing to make some of his stock purchases. I know that the word "market timing" is considered taboo among most value investors, but I don't see why. Ben Graham's story of "Mr. Market" that he told Buffett when Buffett was a student at Columbia is a quintessential tale of market timing. The moral of tale was that as an investor you can always say "no" to Mr. Market until he comes to you with a price you like.

Waiting for a price you like isn't timing the market.

Timing the market would be delaying the purchase of an undervalued security because you predict it will go lower very soon. Or delaying the sale of an overvalued security because you predict it will go up some more.

Buffett doesn't time the market. He will buy undervalued securities even though he doesn't know if it will go down, up, or sideways for the next few months. Timing the market entails using what you think will happen in the market in the next few months to make your current decision. Buffett has emphasized time and again that he doesn't do this, so I don't understand why so many people insist that he times the market.

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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4363 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/18/2002 6:48 PM
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"Common stocks, of course, are the most fun. When conditions are right that is, when companies with good economics and good management sell well below intrinsic business value - stocks sometimes provide grand-slam home runs. But we currently find no equities that come close to meeting our tests. This statement in no way translates into a stock market prediction: we have no idea - and never have had - whether the market is going to go up, down, or sideways in the near- or intermediate term future."
http://www.berkshirehathaway.com/letters/1986.html


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Author: TheVlad Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4364 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/18/2002 8:22 PM
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What should I do when my reasoning agrees with Buffett's? (which is almost always the case) Should I waste my time re-writing in my own words concepts that Buffett has already eloquently stated? I don't see the need to reinvent the wheel.

There is a difference between reasoning and quoting. Since you haven't demonstrated your reasoning, there is no way of judging it. Besides, the quotes themselves do not demonstrate reasoning, either. They are simply statements with nothing to show how one arrived at them (i.e., reasoning).

Like Buffett said, it is "pricing" his purchases, not "timing" them. If Buffett likes a company and it is priced attractively compared to the intrinsic value, then he buys *now* (assuming cash is available and he has no better opportunities right now). He doesn't time the market. He doesn't try to decide if the stock will go up or down in the next few months. He just decides whether the price is attractive compared to the value *now*, because as he admitted, he doesn't know what the market will do.

Am I the only one who understands this simple concept?


If I understand you correctly, you are saying that he would buy a company trading at a price attractive in comparison to its value even if the company was trading at this price for quite a while and market showed no interest in the company despite such a prolonged discrepancy between the price and the value and this discrepancy continued for quite some time after his purchase. Am I right? If so, since you are an expert on Buffet, could you show me some examples of such purchases?

I think that he operates as in the examples I mentioned when he bought stock in companies only at the time when market temporarily mispriced these companies based on the collective psychology. In which case, it is timing even if it is seemingly denied in the quote.

The only real way to prove me wrong is to show the concrete examples when he bought stock in the companies that were mispriced for a long time and stayed mispriced for a long time afterwards. Only then there will be no clear connection to timing.

These examples cannot be outright purchases of the companies. Companies have to still be publicly traded. Please include their names and approximate date of purchase. Preferrably, within the last 10 years to make it easier for me to cross-check it with the historical data.

Thanks,

Vlad

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Author: TheVlad Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4365 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/18/2002 8:33 PM
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Waiting for a price you like isn't timing the market.

Timing the market would be delaying the purchase of an undervalued security because you predict it will go lower very soon. Or delaying the sale of an overvalued security because you predict it will go up some more.


I disagree with your interpretaion (see more in my previous message). I don't think that Buffet buy the companies that were cheap for a long time (as usually there is a reason as to why they are cheap).

He buys high quality companies only when temporarily mispriced. In other words, he doesn't shop in 99 cents stores. He shops in Nordstrom during their twice a year sales.

Waiting for that sale to occur is timing. There is no way around it. Your definition of timing is artificially limited and no one uses it this way. If they do, they pay the price.

V.


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Author: TheVlad Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4366 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/18/2002 8:39 PM
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BTW, I don't think that only 20% of a stock's performance is determined by its own fundamentals. I read somewhere that 40% of a stock's performance is determined by the company's performance, 30% by the performance of the industry/sector, and 30% by the overall market. I don't know how true that is or not, but this seems more plausible than the 80% influence that was mentioned.

I've read about it in an analyst report from a pay web site (http://www.dorseywright.com). Here is a quote that includes references to the scientific research which establishes the quoted percentages of performance contribution:

"Let's take a closer look at the causes of price change, which is what this is all about anyway. From Investors Business Daily: "Check Out Industry Rankings Before You Purchase a Stock" by Nancy Gondo. IBD studied the causes of stock movement from two books: "The New Science of Investing," by Dr. Robert Hagen and "The Latent Statistical Structure of Securities Price Changes," by Benjamin King. These studies found that half (50%) of a stocks movement was attributable to the Sector, with 37% of the risk found in the group and 12% found in the broad sector. The market as a whole came in at 31%, making the total combined risk that is out of the purview of the fundamental analyst at 80%."

Vlad


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Author: TheVlad Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4367 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/18/2002 8:46 PM
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Me: "Do you think the market is stupid and can't see a good thing for what it is?"

greenmartian1: "Usually, yes."

If you say so.

Personally, I prefer not to argue with the market about who is right. Maybe not as good for my ego but much safer for my pocketbook.

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Author: greenmartian1 Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4368 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/18/2002 8:49 PM
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Personally, I prefer not to argue with the market about who is right. Maybe not as good for my ego but much safer for my pocketbook.

I'm all for you doing whatever it is you want to do to make money.



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Author: TheVlad Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4369 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/18/2002 9:13 PM
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I'm all for you doing whatever it is you want to do to make money.

Finally some sensible words. Something I whole-heartedly agree with you on. Whatever works, as long as it works :-).


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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4370 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/18/2002 9:34 PM
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There is a difference between reasoning and quoting. Since you haven't demonstrated your reasoning, there is no way of judging it. Besides, the quotes themselves do not demonstrate reasoning, either. They are simply statements with nothing to show how one arrived at them (i.e., reasoning).

[Miscellaneous crap snipped]

You are a waste of my time. Into the penalty box you go.

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Author: TheVlad Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4371 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/18/2002 10:45 PM
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You are a waste of my time. Into the penalty box you go.

Is it what you do when you find yourself unable to debate an issue?

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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4372 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/19/2002 3:09 PM
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making the total combined risk that is out of the purview of the fundamental analyst at 80%.

So would that suggest employing a sector-neutral strategy like buying a semiconductor and offsetting 80% of your risk by shorting the appropriate ishare for the semiconductor sector?

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Author: TheVlad Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4373 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/19/2002 7:45 PM
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So would that suggest employing a sector-neutral strategy like buying a semiconductor and offsetting 80% of your risk by shorting the appropriate ishare for the semiconductor sector?

I don't think it does. I am no expert on market-neutral strategies but I would think that for such a strategy to work you would need to choose strong stocks for longs and offset those with weak stocks for shorts. If you select a semiconductor stock for long, it wouldn't make sense IMO to sell short the whole sector as it also includes performance of strong stocks (and the one you are long, too). If the sector overall is on the rise you will be only hurting your returns. You could pair it, though, with a weak semiconductor stock and, thus, have a sector neutral pairing because the spread in performance will be maintained no matter what direction the sector would move in.

I think their point was that if you find a stock which is good on fundamental basis, that alone will not be enough of a reason to purchase that stock as if it is in an out-of-favor sector and the market is trending down, you will not get a good performance out of it. You are much better off selecting stock with quality fundamentals in the sector which is being favored and, preferrably, when market is moving up. Then the odds are really stacked in your favor.

HTH,

Vlad

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Author: joebedford Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4374 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/20/2002 9:22 AM
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There is some debating in your posts 'tis true, but FWIW, I also detected a note of personal antagonism.

Thanks!
Joe

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Author: WeldonM Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4375 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/24/2002 2:36 PM
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Heh. Vlad, are you trolling the Buffett fans again? ;-)

Weldon

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Author: TheVlad Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4376 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/24/2002 6:49 PM
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Hi Weldon,

I was just trying to answer a question for someone when I was suddenly challenged by a Buffet fan :-). I made a mistake of not ignoring it :-).

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Author: joebedford Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4377 of 6722
Subject: Re: Roth Portfolio Management Advise... Date: 4/25/2002 9:36 AM
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Back off, moron. "Margaritaville" roolz!

;-)
Joe
Will someone start a new thread already?


I was just trying to answer a question for someone when I was suddenly challenged by a Buffet fan


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