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Motley Fool Global Gains / GGM: Global Gains Philosophy


Subject:  Re: Stalking The Bear Date:  7/9/2008  9:20 AM
Author:  anuragupta Number:  77 of 5166

.... how more experienced folks approach buying in such a market and how others (experienced and inexperienced alike) are actually approaching this market ...

This is what I like about a bear market. It provides a potential to erase the differences between experience and inexperienced due to inherent market inefficiencies. I have been looking at both categories of people on these boards and there is a good number of people in each category who are waiting for better prices and others who are buying.

I note that all advisors caution against timing the market even at this time.

I am using the "sprinkling approach". For each position add-on, I ensure that I get it at 30% better value point. For many companies value point is akin to price point these days. I do not worry about the slide deeper from my purchase prices unless the company is in danger of being wiped out such as PRS or MF. AIB can go to $5 and I will happy chase it to that number in 30% intervals as I don't see it collapsing with the IRish real estate market, at least so far. The size of each position is identical in number of shares. If the market accelerates in its fall, my buying rate accelerates too as I chase down my stocks. Buying of new stocks is at the same pace as earlier. I am also giving higher wightage to high yield stocks from II. I see this as a good time to bulk up on quality companies that have a history of increasing dividends. For the last 2 years, dividends have been providing 4 months of my new stock purchases.

I haven't done so but I am ready to dip into margin if I have to. I don't expect the market to fall by 40% or so to result in margin calls. Dangerous territory, I know. Market may take more than 5 years to recover especially when the global markets have started to fall.

I am also using this time to identify macro-trends. Although not recommended anywhere, yet, I am going into agricultural stocks as I think inflation rise will continue for a decade. Food prices had been depressed for long while the scarcity crisis was rising globally for years. I made good money by catching into the oil rise in 2003. So far I am using Deej's portfolio as a guideline.

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