Author Topic: Getting gains in a bull market  (Read 1725 times)

LR1400

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Getting gains in a bull market
« on: April 07, 2018, 01:11:19 PM »
With all of the talk surrounding many underperforming value investors and funds, does anyone see a real and tangible issue with following and transitioning between multiple strategies?

Itís clear a Driehaus strategy works, a Buffett strategy works, and a Graham strategy works. To me, it seems more logical to follow a Driehaus strategy than the shorting strategies Ackman, Tilsin, et al used. Driehaus may short but his core strategy is growth. It still seems more logical to avoid shorting and instead follow a value investing strategy while investing for growth at the same time as opposed to simply betting on a stock decrease.

Your upside in growth isnít as limited as your upside in shorting. You can get the same return by investing in growth and sell like Driehaus.

Itís not a sit on your ass strategy because you have to be ready to sell at the first hint of stagnant growth. But whatís wrong with investing in obvious growers or even a reasonably clear melt up? Grantham has basically advised a somewhat similar strategy.


John Hjorth

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Re: Getting gains in a bull market
« Reply #1 on: April 07, 2018, 03:35:28 PM »
... With all of the talk surrounding many underperforming value investors and funds, does anyone see a real and tangible issue with following and transitioning between multiple strategies? ...

No. The only person etc. you have to be upright and honest towards to is yourself, based on your conviction at the time of the actual decision & action, and your analysis as basis for creating your opinion/conviction.

And please post about your decisions and actions here on CoBF, when you do them. Doing that, there is no carpet to sweep in under. Be your self, and stand by it, untill proven otherwise. If that happens, then admit it - [best: here - you will not be ridiculed - never!].

The point here is, that you can't rewire [just like a *snap*] your own brain on your own demand [, perhaps based on "strategies"/"religion"].

Please be faithful to yourself and your personality.
ĒIn the race of excellence Ö there is no finish line.Ē
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

LR1400

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Re: Getting gains in a bull market
« Reply #2 on: April 08, 2018, 06:59:58 PM »
Thanks John.

I agree with you in all aspects. For sure itís very tough to hop back and forth between multiple philosophies.

Though, I believe growth and value strategies arenít polar opposites, more of a spectrum. ďJoined at the hipĒ, per Buffett.

Heís a great example of someone that has and does use a spectrum between value and growth. Heís mainly been growth for a long long time with instances of value (net net) buys in his personal portfolio.

Polar opposites to me are those who are trading on daily swings versus those who plan to hold for long term or at least until fundamentals change. Also opposites are those who are ultra macro or event oriented like a Soros versus those who are individual business or industry fundamental based like Buffett, Munger, Fisher, Lynch, Zell, Rainwater, even Driehaus.


The two main things that I struggle with from a personality standpoint are:

1. I donít particularly like crappy companies. I own part of one and once I studied Buffett and Munger I could pinpoint every reason why the business isnít a good one and it wonít ever be a really good one. Itís akin to textiles in the 60ís and 70ís. I remember reading through the annual report book and saying, damn, if I havenít seen this this and this before. Lol.

With that being said, I understand value and the Graham philosophy. I would have no problem following it, except there usually arenít many areas to employ the strategy.

2. In a true crash, I would buy the good companies at the lower prices and still stay away from the crappy business at the even lower prices.

3. I donít draw a line between buying a higher priced stock from a PE perspective versus a lower priced stock or even a net net. They both involve making a decision based on the future cash flow you can receive for the business. On the net net, itís the net based on the liquidation at current assets and liabilities, on the very high PE itís the future earning power of the business. Both are still attempting to value based on the future cash flows.

4. Some other strategies I view as special situations. I view following an Icahn into a position as a special situation at times, where you feel the activist input and consequently the market will reward you. Itís like a spinoff or a merger arbitrage, where the spinoff has classically increased.

Cardboard

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Re: Getting gains in a bull market
« Reply #3 on: April 09, 2018, 05:33:40 AM »
There are many ways to skin a cat. Key is to understand what price you are paying for what you are buying.

Peter Lynch had six categories: slow growers, stalwarts, fast growers, turnarounds, cyclicals and asset plays.

Cardboard

John Hjorth

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Re: Getting gains in a bull market
« Reply #4 on: April 09, 2018, 11:52:31 AM »
What Cardboard said.

Add to that the concept of "circle of competence", combined with the concept of "your investment universe" as a stock picker, which requires you to study and follow each investment - potential or actual - long or short.

There are only so many hours in day and night. I'll allege, that the most of the fellow board members here on CoBF who can develop an opinion on an investment within a few days, and perhaps also master several investment techniques [momentum, value, trading, shorting, GARP, technical analysis, pure short term market sentiment driven investing, special situations, what ever] have been in this game for more than a decade.

Not much come easy. The harder you try, the harder it gets, the more humle you get in your approach to the task.

It's all about the allocation of your time and energy, based on "where you are in your investment existense & life". [I.e. "How you're "wired" at the moment."]

- - - o 0 o - - -

Here is an extract from a post by Joel - in the LUK topic - from today! - That tells it all! [and I'm not trying to ridicule Joel here - by no mean!]:

... Well, I'll end up being wrong one way or another: either initially for thinking the consensus was wrong or now for succumbing to it.  I guess I'd rather be wrong the second time ...

- - - o 0 o - - -

Edit: Here is an extract from a post by Uccmal from 2016 in the topic "Buying into a market crash":

...  I can only stomach so many banks so its Royal. ...
« Last Edit: April 09, 2018, 02:28:39 PM by John Hjorth »
ĒIn the race of excellence Ö there is no finish line.Ē
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

LR1400

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Re: Getting gains in a bull market
« Reply #5 on: April 09, 2018, 07:51:47 PM »
With regard to strategy.

Being able to spot a net net and investing in say 30 of them requires no skills not possessed by engine on his board. There are just not that many opportunities very often, unless you want to go abroad.

Spotting growth that will continue for many years is the difficult one when attempting to get it at ďa reasonable priceĒ. This strategy requires the most research for me, but more important than the research, it requires much more judgement and assumption. You, many others on here, and of course the greats say, ďit must jump out to youĒ.

The idea to place a small amount of capital into momentum/high growth with a discipline to sell came from Grantham and his recent letters. He advised 2%. I see nothing wrong with this for an individual investor.