Strategies for Patience

[LongHaul]

I was curious what strategies people used to be patient when they can't find anything that is undervalued (and low risk).

In my opinion, lots of companies are fairly valued or overvalued right now.  The last time it was like this was 06/07 when there were a ton of overvalued companies.

 

 

 

 

[Palantir]

www.facebook.com

 

I'm lazy, so not doing anything comes naturally to me. I like this long term buy and hold style for a reason...  ;D

[Parsad]

I was curious what strategies people used to be patient when they can't find anything that is undervalued (and low risk).

In my opinion, lots of companies are fairly valued or overvalued right now.  The last time it was like this was 06/07 when there were a ton of overvalued companies.

 

Watch a movie...watch game 6 & 7 of the NBA finals...go on a vacation...sleep...hang out with family or friends...go play tennis...hold a garage sale...lots of things you can do!  In other words, live an actual life.  ;D

 

If you want to stay on the investment track, something I do during periods like the last few weeks, is I'll spend more time reading books that I need to catch up on, because I'm usually too busy looking for ideas or doing administrative stuff with the funds. 

 

I would much prefer days like Wednesday and Thursday though.  I get giddy when I see markets tumble.  Cheers!

[Guest]

Sanj,

 

Have you started deploying any of that cash hoard yet?

[Packer16]

You can reaserch an area were there is distress to look for bargains and become adept at understanding those types of firms.  Two areas now are natural gas and telecom.

 

Packer

[Uccmal]

Research without buying is a good idea.  I reviewed US banks of all sizes all one winter.  One summer I read Security Analysis on my deck - the whole thing. 

 

Dividends lessen the pain.

 

Do something else completely unrelated.  Play a musical instrument.  Learn Spanish, or Mandarin.

 

 

 

 

[Kraven]

Have some fun! Yes, sleep when you feel like it, not when you think you should. Eat food that is bad for you - at least once in a while. Have conversations with people whose clothes are not color coordinated. Make love in a hammock!

[Otsog]

Meditation (not joking)

[Parsad]

Sanj,

 

Have you started deploying any of that cash hoard yet?

 

No, only about 5% of it into something we like.  I was hoping we'd see at least a week long market meltdown...no such luck.  Maybe next week!  ;D  Cheers!

[ourkid8]

Is that something you like happen to be Sandridge?  :-)

 

Sanj,

 

Have you started deploying any of that cash hoard yet?

 

No, only about 5% of it into something we like.  I was hoping we'd see at least a week long market meltdown...no such luck.  Maybe next week!  ;D  Cheers!

[Gamecock-YT]

I was curious what strategies people used to be patient when they can't find anything that is undervalued (and low risk).

In my opinion, lots of companies are fairly valued or overvalued right now.  The last time it was like this was 06/07 when there were a ton of overvalued companies.

 

If you want to stay on the investment track, something I do during periods like the last few weeks, is I'll spend more time reading books that I need to catch up on

 

This. If I'm not reading ideas, then I'm reading books.

[Mephistopheles]

Working on my poker game. :D

 

However I did pick up some SHLD over the last few weeks as the price has deflated following earnings. But this is something that I've known about/researched for a while.

[CONeal]

A very good question.  Been struggling with the same issue most of this year.

 

Got a bicycle, planned a vacation for later this summer, reading some books, figuring out ways to save money, taking the time to actually cook myself.

[oddballstocks]

Cool ideas, based on the responses I'm guessing everyone invests full time or is a professional?

 

I do this on the side, amazingly there are still plenty of cheap companies to pick through, maybe I'm just looking where others aren't or my standards are lower.

 

The market increase has been nice, I've been working on launching a startup and haven't had as much time to research as I normally would, my time is all going into the startup.

[matjone]

You could look through your holdings to see if they should be sold.  You could just keep looking like Nate says.  I still see people coming up with ideas that seem cheap on some of the blogs I follow.  Or you could look for arbitrage opportunities, opportunities to invest in private businesses, opportunities to start your own business, and so on.

 

Or you could just do like other have suggested and go have a good time doing anything you enjoy.  I look at that as the lowest risk thing you can do.  There's no money to be made but there is no way anyone can  take away a good time you've already had.

[boilermaker75]

Cool ideas, based on the responses I'm guessing everyone invests full time or is a professional?

 

I do this on the side, amazingly there are still plenty of cheap companies to pick through, maybe I'm just looking where others aren't or my standards are lower.

 

The market increase has been nice, I've been working on launching a startup and haven't had as much time to research as I normally would, my time is all going into the startup.

 

I also have a full time job and invest as a hobby (obsession?).

[giofranchi]

I was curious what strategies people used to be patient when they can't find anything that is undervalued (and low risk).

In my opinion, lots of companies are fairly valued or overvalued right now.  The last time it was like this was 06/07 when there were a ton of overvalued companies.

 

I try to work hard on the businesses that I control, and try to make them generate as much cash as possible. The larger the cash they generate during these periods of “can’t find anything that is undervalued (and low risk)”, the more dry powder I will have to take advantage of any market correction. :)

 

giofranchi

[giofranchi]

I was curious what strategies people used to be patient when they can't find anything that is undervalued (and low risk).

In my opinion, lots of companies are fairly valued or overvalued right now.  The last time it was like this was 06/07 when there were a ton of overvalued companies.

 

If you want to stay on the investment track, something I do during periods like the last few weeks, is I'll spend more time reading books that I need to catch up on

 

 

This. If I'm not reading ideas, then I'm reading books.

 

 

I never read books, even in periods of “can’t find anything that is undervalued (and low risk)”… Because I always listen to audiobooks, even in periods of “too many ideas, not enough capital”… And I listen to them in hours of the day I couldn’t be working or researching ideas anyway: while driving, while walking, while at the gym, etc.

While at the office, I never read books: instead, I always read about my investments, or eventually about new ideas, otherwise I work on the businesses that I control.

 

giofranchi

 

[Guest deepValue]

The market increase has been nice, I've been working on launching a startup and haven't had as much time to research as I normally would, my time is all going into the startup.

 

I'd recommend the startup or business acquisition strategy for anyone who's looking for something to do when bargains are scarce. Exploiting a competitive advantage in a business that you control is almost as much fun as getting a free ride as a partial owner of a business that has a durable competitive advantage.

 

(In this case, I intend for 'startup' to mean "new business" instead of "fast-growing business." Fast-growing businesses rarely need a competitive advantage in the early stages, but they're also hard to start. Most people who have lived in the same area for many years probably have or can develop a local competitive advantage in one business or another, which makes it relatively easy to start a locally-based business that earns high returns on capital)

[scorpioncapital]

i sell deep out of the money put options while waiting. If I think a stock is overvalued now, many premiums are yielding 15-20% on collateral at half the price. Presumably half the price is a better entry point for a stock you like than twice the price.

 

 

[no_free_lunch]

ScorpionCapital,

 

Your put strategy sounds interesting but I don't know of any stocks where a put striking at 50% of current market price yields15-20%, not even a long-term leap.  Likely I just don't understand your strategy.  Could you give an example?

[Guest deepValue]

Instead of selling puts, you could put all of your cash in a well-managed, slightly undervalued company like BRK and sell slightly out-of-the-money calls for ~1% return each month + capital appreciation if contract expires in the money.

[bargainman]

Definitely do some studying on options. You can always find something to do with them regardless of the market's bubbliness.  One example is to hedge by doing a ratio spread (or backspread, I forget the exact term).  For example you can usually buy 1 put at the money, and then sell 2 put options at a lower strike, for net of zero or a slight credit. That will basically hedge you part way, but give you some downside protection if the stock/market tanks.  Up until the lower strike price, where you will be forced to buy a stock at that price (since you sold 2 puts).  But if the market stays stagnant or goes up, the hedge doesn't cost you anything out of pocket.  But it does cost you buying power (It's not free for sure).  Anyway there are a ton of credit or debit strategies that wlll keep you busy and let you profit in whatever scenario you choose. Just make sure you don't use all your cash or buying power, or you wont have money to take advantage of the eventual swoon.

[LongHaul]

Wonderful responses!  Thanks everyone.  What I am comfortable investing in is quite small at this point as the last time I reached I fell off the cliff? I am trying hard to avoid reaching and buying risky investments.

 

To summarize the responses, it seems like the answers fall into a few categories:

 

1.  Distract yourself with something other than investing.  Perhaps this is why Buffett plays Bridge.

 

2.  Start a business.

 

3.  Research businesses and invest in yourself.

 

4.  Meditate.  I definitely need to look into this as I have heard that meditation increases self control.

 

I am an impatient person by nature and at times the waiting gets to me.  Any strategies for increasing patience that have worked for others I would be curious about.

 

Thanks.

 

 

[no_free_lunch]

Distractions work great for me.  I find some project to work on, usually after a few days you are not even thinking about investing.  It becomes the opposite problem where you start to find it difficult to motivate yourself to start researching stocks again.