A Comment Worth Sharing
There was a comment made in response to my post “On Shareholder Wealth” that I wanted to make sure everyone had a chance to read. Since I just put up a very lengthy analysis of Pacific Sunwear (PSUN), this comment could have drifted off into oblivion. It has given me all sorts of ideas for a post, but I’m working on the next podcast at the moment, so that’ll have to wait a day or two. In the meantime, I’d like to give you the chance to read the comment and think about it. It’s a very important topic, and I’m glad Bill (of Absolutely No DooDahs) is there to make sure you get the whole story.
Bill and Geoff,
In the last 3-4 months, since I began investing, the information I have gather from your two websites has been perhaps the best information out there, professional or otherwise.
What makes your blogs unique is that both of you are unafraid to engage in a dialogue on a topic of discussion which you may disagree. In essence we as readers get two blogs for the price of one, so to speak.
I find myself often agreeing with both of you on most issues. Much like Fred Flinstone who had a devil and angel appear on his shoulders when he was torn between two choices, Geoff and Bill sit on my shouldes and shout “all value no TA” or “Value and TA can coexist without destroying the universe” as I ponder my investment choices (I make no assertion as too who is the devil or angel among the two).
I must say that I feel I fall somewhere in the middle of you two, but will admit that because of my lack of math skills, skills Bill has been blessed with, I lean more towards Geoff but embrace the TA analysis Bill provides.
With that said..this is what I have taken so far from the current discussion…as well ad both of your previous writings…
I am investing for a minimum of 24 years (thats when I can take disbursments from my various IRA’s) so I understand what Geoff says about buying the business. I own PETM, when I go shopping for the dogs, I get a kick out of knowing that my “shares” represent an owneership interest in PETM. Even thought my actual interest may only equate to one bag of dog food or 5 rawhide bones, I know I “own” it as well as portions of future earnings.
So over the next 24 years (if i ere to keep it that long), whther PETM tades at 10 a share or 300 a share, as long as the value of the business itself grows at a sufficent rate, than when I choose to sell the future share price will take care of itself.
But I also get what Bill is saying. Gains are only gains when you can feel them in your hand. buying BUBL at 50 watching it go to 250 down to 25 and back to 50 means nothing to me because until I “swing” and sell I have lost or gained nothing.
So after reading both of you as well as others I have decided on the following course of action which includes a proposal to both of you as well as others which we can discuss either here or in the forum on marketocracy.
I am trying to develop a core group of companies/stocks which are great companies/stocks to own. how many? I dont know yet 20, 50, or 100 (maybe 5 or 10 per sector)..but what I hope to do is develop a list with what I belive to be fair value per share…and wait until I can buy at a discount…thats the Geoff in me..not that Bill is against that…
But the Bill in me knows that there will be times when these great stocks will be overvalued and the TA indicators will be whispering that the trend is about to turn…and i will sell.
so if i have 50 great companies..at any one time some will be undervalued by the market and I will buy…becuase even though the stock price may not go up..what geoff has shown me is that as long as a great company is increasing the value of the company I am gaining vlaue
and when they are overvalued i will sell and as Bill tells me I will realize my gain in value.
Now maybe I am too unsophisticated to know that my idea is foolish or too simple. But i think back to the old joke about the two hunters out shooting for some bears.
The hunters get suprised by a bear, drop thier guns, and start running for it..
one hunter says to the other hunter, “boy i hope WE can out run that bear”…and the other hunter smiles starts to run faster and says “I dont have to out run the bear, I just have to out run YOU.”
and that’s how I see investing. i dont have to out run the bear (or i guess the bull) I just have to outrun the other hunters. and in the short few months I have been reading I think I might be able to outrun a few wother investors (i mean do you really think the bird flu is going to wipe out every chicken in america, because that is how everyone is acting with chicken stocks, i am starting to get real greedy about SAFM by the way, thanks to Bill and Geoff)
So i will only buy good or great companies who internally grow my interest as an owner (thats Geoff talkign to me) but i will never love a company so much that i wont be afraid to dump it if some other person wants to give me more than i think it is worth knowing that I can take my profit move it into another great company and wait for that one to get cheap again (thats Bill talking to me).
Anyway i think you guys are both right in your analysis because you are ending up in th esame place..just taking different roads to get there.
i dont know if i added anything to this particular discussion but i just wanted to let you guys know that you have at least one very interested reader.
Steven