Replies to post #9583 on Value Microcaps Motherboard

[lentinman]

SSKILL: Clarification:

I want to make sure to correct something you said (or implied). I have not said the markets are going to go back to October 2002 levels. If you are right and they go back 50% of the way, that is carnage enough for me to have justifiably gone to 75%+ cash. Although, if I HAD to guess a retracement number it would be about 62%.

Len

[researcher59]

SSKILLZ1: Thanks very much for that detailed description of your market forecast and strategy. A shift of 10% to 15% in your cash position on some days certainly represents a very high portfolio turnover rate. I presume your annual turnover is several 100% ? There are many different investment styles and they can all be successful. Some people like to cut losses quickly, a more technical strategy, but I prefer to focus on fundamentals and often like to average down. My tendency is to hold for longer periods of time, though in recent years my gains have increasingly shifted to short term. A few years ago I would typically report only long term capital gains because the short term gains and losses would be roughly offsetting. But last year about 65% of my gains were short term.

The volatility in the microcaps certainly offers some excellent trading opportunities and sometimes I even manage to flip shares in a single day for a good profit. But my average holding period is probably still around 6+ months, with many gains benefitting from the lower long term capital gains rate. I hope you're wrong about the Russel 2000 going under 500, but if does, there'll surely be some good bargains out there. Since I rarely go much into cash I buy the bargains by 'juggling' stocks in my portfolio ... for instance selling shares in a midcap that's not been hard hit to buy a microcap that's oversold. Or I borrow on margin if I feel confident enough.