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Subject:  Re: RB/RM inconsistencies? Date:  2/18/2000  8:50 PM
Author:  TMFLost Number:  211 of 265

Hi Tim,

I'd like to give you my own views on your post- I'm sure that others will be along later with theirs.

First of all, I'm not sure that the book does understate the risks, and certainly the Breaker portfolio reports on the site do not. Investing in companies that you hope will be the giants of the future will always involve risk, no matter what methods are used to find them. However, the market rewards the greater risks with greater returns, so if you can find a method to remove those who are risky but have little chance of success, you should be able to do better than average. That is what the Breaker portfolio is trying to do.

As far as the press calls of overvaluation, here are my thoughts. If you watch the financial media, you will see that it does move markets. A good example from the UK was a daily show called "Show Me the Money", where teams would make daily investment decisions, and CEOs would appear to "discuss" (erm, ramp?) their company. It was found that the companies that appeared would jump upon their appearance, and the "picked" stocks would sometimes double within minutes (I understand that the programme may be under investigation as a result, but I'm not certain). Given this tendency for lazy investors to jump on a bandwagon, if I want to improve my returns, I want to buy at a low price. Given that it fulfills the rest of the criteria, it is a company that is popular (seen by price rise). By looking for the Overvalued report, if this is satisfied there should have been a bit of a lemming sell-off, allowing me to buy in cheaper before normal service resumes.

Of course, I could be totally wrong here, I'm no expert.

I must say, though, for myself I'm still trying to get fully comfortable with the Breaker philosophy.

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