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When do you admit MR. MKT is right.


ubuy2wron
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The topics which have received the most attention  here are those dealing with investments which have not been rewarding investors. BAC RIMM LVLT etc have received the most posts. FD disclosure I am long BAC and briefly owned RIMM and will buy LVLT if it hits my order next week. These are all investments which have tested investors patience greatly at what point do you through in the towel my personal experience has been that averaging up has been a better strategy that averaging down. The Dhando investor which I highly recommend ,dealt with this, and said that a 3 year hold on average was required for a turn around investment.

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Mohnish's comment said three years was the "average".  How long did Fairfax's turnaround take?  Five years!  Could have taken 7 or 8 if it wasn't for the homerun on the credit default swaps. 

 

I think the most important aspect is to examine if things are improving or disintegrating.  I think things are improving quite dramatically at BAC, stagnant at LVLT and disintegrating at RIMM.  Moynihan has made huge strides in less than two years.  Not sure if it is the business model or the board that is rubbish at LVLT.  RIMM may need more time to turnaround, but I think things will only get tougher. 

 

At the same time, Prem has made big investments in both RIMM and LVLT and is one of the most patient guys you will ever see.  So if anyone knows about the time it takes for something to turnaround, it's got to be Prem!  Cheers!

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I think many people who post on this board are fairly sophisticated investors who are looking for home run investments. BAC is a great example... should the bull thesis prove correct the stock could easily hit $20 in the next couple of years. Most board members do not show the same passion for the more boring stocks with less upside such as BRK.

 

I think the key is understanding 'the story' as to why you have purchased a stock. Sometimes the story deteriorates (i.e. RIM) and my experience is one should sell. Sometimes the story gets better (i.e. BRK) and the stock sells off aggressively and my experience here is one should buy more. Sometimes you are doing the same thing as Mr. Market... most times you are doing the opposite of what Mr. Market is doing.

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It has been a very trying year.  Ytd, I have only a handful of stocks that are up at all:  ffh, bby... And a couple of minor positions.  Macro events are dictating everything right now, putting the voting machine into full swing.  That, ironically includes FFH which is up mostly due to it's downside protection. 

 

I can run through the portfolio and see no fundamental reason why anything should be down, except perhaps rim.  I am heavy on financials but not extremely concentrated.  Names: ssw, BAC, jpm, wfc, rbs preferreds, bby, ylo preferreds (up), mtl, rim, ge, cfx.  When the macro shifts there will be rocket fuel under this. 

 

On the plus side I have alot of tax losses already harvested which I can push back or use forward. 

 

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