Bought it... sold it... 100%. $ is $.
I don't look for, own or pick "stocks that I like" only because I like the businesses they are in or some aspect of the specific company... although knowing a business or company from DD or past experience allows you to make better judgments about them. I don't care much about the particulars of the companies other than for how they relate to a connection to others perceptions of value... or to a disconnect in the attachments to value... and how they are likely to change over time. Instead, I look for those that have solid values or prospects that the market is, for one reason or another, vastly underpricing. Being right about the value issues matters first, along with knowing something of the variety in how, when and why and the degree to which underpricing occurs. Those two, together, are the most important element in investing ? True, because the biggest factor in the success of any investment is what you paid for it... that followed closely by proper timing... and only then do you get to parsing the differences between the short term and long term ?
Whether it is a short term issue, or a longer term issue, the whole point is to buy low and sell high... whether the time it will take to correct the price imbalance is short or long. The PATTERN in the market behaviors is the same over different time periods, charts show that, too... but the magnitudes of the differences over time are not similar. It really doesn't matter much whether the difference between what you paid and what you sell for is driven by others recognition of earnings, or by any other factor the market uses to determine value and price. A lot of price difference in stocks, between one industry and another, or one company and another, is nothing but fashion and fad... and there isn't anything wrong with trading based on that awareness... as long as you are aware of the source of "value" in the things you trade ?
I prefer stocks that others dislike or have given up on, when the reasons for doing so are... social, emotional, not rational... based in unreasonable fear or uncertainty that is in excess, based on expectations about a stock or industry relative to what tends to actually happen in the real world, instead of what people either fear or anticipate... in error.
Of course, that is the hard part, isn't it... not being afraid when others are... while also not making many mistakes about whether or not you should be afraid... relative to the balance in others emotion... and how and when that will change.
Shipping stocks "look" undervalued to many now... relative to what the shipping stocks were doing recently... not relative to what they looked like at the end of the last recession.
The larger picture now seems to be dominated by the fear that there "was or is" a likelihood of a global deflationary depression... but that fear is paired with the reality that most people in the market now have never been through a "normal" recession. What we are experiencing now is a "normal" recession... although one with some significant modifiers relative to past experience... All the numbers coming out now still show LESS impact than that felt in 1982... and THAT is remarkable... both that it seems we are on track to dodge the bullet of something much, much worse, and that so few can tell the difference between a normal down turn in business... and the implosion of the entire economy.
There IS still risk, obviously... but it looks to me like the markets apprehension of risks is almost 180 degree out from what it should be. We HAVE BEEN at extended risk of deflation for the last 8 years or more... while the decision makers fought inflation and denied there was any deflation risk. Now that the reality of the recent past is properly recognized and corrections made... there is now a pervasive fear of deflation... when now what is coming is inflation... deliberately created as the lesser of evils. So few have "been there, done that"... that it seems they are unable to read the road map showing where we are going... IMO.
The nature of the risks to the economy, along with the (over-) steering inputs, have dramatically reversed by 180 degrees in the last three months. The steering input changes haven't begun to show any impact in driving a course change... yet. They will...
If you don't understand the deflation - inflation risks and expectations, and how, when and why the policy errors that have been made to get us where we are, were made, you likely will also not get "what it all means for what is likely to happen next"... and you need to have a feel for that to be well positioned to benefit from change when it comes.
And with that, I'll end my Sunday sermon...
Ya'll have a good week trading...
