Did Value Investors Survive 1929-1932?

Quote from makloda:

I disagree. If anything, value investing is related to "price counter-trend" and "reversion to mean" strategies.
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So following your logic, value investors would survive (not even talking about high returns) a multi-dedade decline in the stock market (a la Japan starting '89)?

Give me a break! The thing about value investing is that one never knows if one's fundamental reason is the cause for a stock's rise.

Why do you think Buffet started getting into options and various complex derivatives? Those buy and hold strategies must not be working too well (even for somebody as well connected as he is).
 
1. Yes, Value investors usually don't use long-side leverage on their bets. If their portfolios went down 70% during the 1930s they still "survived". Value investing != absolute returns. Value investing = "buy 1 dollar for 50 cents or less and wait out the distressed times" (buy and pray if you will).
2. Value investing per se is not confined to long only exposure. You can short "overvalued" and buy "undervalued". You could have made a bundle with that approach in Japan post 1990s.

This thread has too much of "my trading method is so much better than Buffet's". You're comparing apples to oranges. Trading != investing.
 
Quote from IShopAtPublix:

You are just not very bright that is all. That is very similar to the behavior of an elementary school kid who learned a new word in school and is all puffed up.

It is not my $1000 account. Because there were no families to give me millions and I am starting out with 0 I actually have to periodically withdraw proceeds from my trading to cover living expenses. I have to take on bigger leverage to amplify returns and strive to reach the "take off" level at which I can switch to something like 20:1 leverage.

Now you can repeat Buffet&Klarman all you want but it does not make you any better or more knowledgeable.
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actually makloda is extremely knowledgeable. his area of expertise is hedge fund performance where unfortunately he is biased in favor of throwing your money away to hedge fund managers in fees of 2% management fees + 20%of the profit arrangements.
i suggest you read his other posts very carefully(articleon german banks was a gem). you sound like a neophyte 1 small step away from a blowout..
leverage will take you out of the game because of your skill level or by an extreme random event
 
Quote from makloda:

1. Yes, Value investors usually don't use long-side leverage on their bets. If their portfolios went down 70% during the 1930s they still "survived". Value investing != absolute returns. Value investing = "buy 1 dollar for 50 cents or less and wait out the distressed times" (buy and pray if you will).
2. Value investing per se is not confined to long only exposure. You can short "overvalued" and buy "undervalued". You could have made a bundle with that approach in Japan post 1990s.

This thread has too much of "my trading method is so much better than Buffet's". You're comparing apples to oranges. Trading != investing.
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Sorry, but down 70% is, all things being equal, pretty close to blow up levels. I don't see the benefits of a margin of safety, in that case. Especially if the gerneral market is going to drag down your stock into the mudd anyway. (More likely to happen these days, since a large number of stocks are purchased through mutual funds.)

Value investors also talk about risk and reward not always being in a fixed ratio. That may be, but in order to benefit from this inefficiency one would have to look toward junk bonds and small-caps. So your margin of safety is basically eliminated since they have a higher default rate and constitute a much riskier investment than the SP500. You simply can't get around the risk/reward ratio, as much as value investors claim they can.

Btw, I never compared value investing to trading. Also talk to some of the "value investors" about their experience shorting NASDAQ futures in 1999 based on fundamentals. Oh wait, they're not in the game anymore... wonder why...
 
Quote from IShopAtPublix:

http://www.businessweek.com/magazine/content/06_32/b3996085.htm

From 1983 (when people gave him $27 mill to manage) to 2006 he compounded 6,133% after fees and S&P had 1,517%.

I wanna see how value investors perform during periods of great stagnation (Nikkei anyone?) and not through booms and technological booms. For people starting in 2008 (during sucky times) I doubt anybody will compile a decent performance for the next 20 yrs.
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Funny you mention that. Here is an author who is predicting a side-ways market for the next decade: Active Value Investing Range Bound is the title. :D

Now, this begs the question: how does he know that this strategy will work, if the last time one had a chance to test it was in the 1962-1982 side-ways market??

http://www.amazon.com/Active-Value-...bs_sr_1?ie=UTF8&s=books&qid=1233078296&sr=8-1
 
Another favorite of mine. Peter Lynche's Magellan fund. Another 'star investor' who claims that most investors lost money because they dumped his fund during bear markets. Well, this would have been the result if one would have hung on for the "long haul":

http://finance.yahoo.com/charts?s=FMAGX

Don't believe any other these "star" fund managers. This is a filthy business.
 
Quote from short&naked:

Another favorite of mine. Peter Lynche's Magellan fund. Another 'star investor' who claims that most investors lost money because they dumped his fund during bear markets. Well, this would have been the result if one would have hung on for the "long haul":

http://finance.yahoo.com/charts?s=FMAGX

Don't believe any other these "star" fund managers. This is a filthy business.
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It has not dawned on some people that long term performance of US stock market had (*gasp*) something to do with US economic dominance during 20th century. During latter part of 19th century US was a rapidly industrializing power, during all of 20th century US was experiencing almost never ending periods of technological innovation (electricity on a large scale, telephones, automobiles, airplanes, satellites, transistors, PCs, internet, etc. That is not to mention the fact that Europe committed collective suicide during WWII (and WWI too)

US is a mature economy now and the relative economic position US occupied after WWII is not going to come back ever.

Furthermore, explosive growth for the US stock market can also be attributed to the rise of the scheme known as 401(k) which channeled US household wealth into the stock market.

Dow Jones did not recover its 1929 level until 1954! Nikkei is still going "strong" about avoiding its peak achieved in 1989.

If during a bull market a stock like Coca-Cola rises it surely must be because of "intrinsic value" not because a Bull Market lifts all boats. If it subsequently falls it must be because market is unreasonable.
 
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