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URL:  https://boards.fool.com/thank-you-vp-i-appreciate-your-response-fwiw-my-25094593.aspx

Subject:  Re: What's Your Portfolio's PIV-ER? Date:  1/27/2007  4:35 PM
Author:  IMRichdad Number:  1258 of 1817

Thank you VP,

I appreciate your response.

FWIW, my investment approach has been most influenced by WEB and Philip Fisher. I've read Intelligent Investor at least a half dozen times and believe it to be a very valuable reference. So is Security Analysis. I would classify myself as an enterprising investor. But, one who still has much to learn.

I devote nearly every waking hour other than my day-job and my family time to learning about investing and different companies. That would total at least 20 to 30 hours per week spent on investing. For a DIY, I'd think that is pretty enterprising.

My investment approach is just as WEB's is:

"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." (Source: 1992 Berkshire Annual Report)

Do to my small size, I've not relaxed the "very attractive price" requirement, though. :)

Ideally, I'm looking for a few excellent companies that meet WEB's three hurdles above and Fisher's 15 Points, as well. (I hope your familiar with Fisher's book "Common Stocks and Uncommon Profits", too) Companies that can do that and which happen to sell at a discount to IV at the time of purchase make very attractive long-term holdings (5, 10, 15 years, or a life time). These are companies whose minor quarterly fluctuations in both share price and performance metrics mean very little.

Granted, many of my large cap holdings do not satisfy these hurdles.

So far in my search I've found one that may be a serious candidate and its market cap is only $200 million currently. It is my largest holding and has performed extremely well even by your standards in the short time that I've held it. But even for it, I simply can't see recalculating the IV on a quarterly basis. Checking to make sure it is performing up to expectations is one thing, re-doing a valuation based on one quarter's results simply seems like a waste of time.

If we are throwing out numbers. I've had companies double in a year too. 200% in two years. 80% in six months. Still, I'm not getting it. Maybe I'm too dense.

Hey, if you got something growing at a gazillion percent per year and a stock price rocketing to the moon, maybe its justified. But if that is the case, I might suggest that even you can't guess at the companies value that closely anyway. Plus or minus one or two hundred percent might be all that's doable.

Personnally, I don't believe that great returns can be achieved by trading in and out of stocks on a monthly, quarterly or even yearly basis. It is thinking like that that got me out of mutual funds and picking my own stocks in the first place.

I mean no disrespect and I really appreciate your taking the time to chat with me about this topic, thank you. I'm sure you are good at what you do. In the end, I'm sure we'll have to agree to disagree on this point.

Rich
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