2/10/03-As the stock market has generally continued to decline, we are now simply assuring that equities are maintained within 10% (i.e. not below 90%) of equity targets (currently $411,500). As our individual stock or stock mutual fund holdings closed at $364,000 today, I've placed orders for the purchase of additional shares (about $6000 worth altogether) of Berkshire Hathaway, Class B (BRK/B) and New Plan Excel Realty Trust (NXL). Both are considered to be good value at low risk.
If the market persists in its downward momentum, I expect to begin purchasing shares in small- to mid-cap. companies with good 3-5 year total return potential, at least average safety ratings, and the highest (1) "Value Line" timeliness and technical ratings. Such assets have had an average compound annual return of over 15% since 1965, according to "Value Line" records.
There's some good news on the investment front. We've received word our refinanced mortgage loan has been approved and are now just awaiting a closing date. Also, the book value of our individual equity holdings keeps going up with all the new bargains bought. It is already close to our year-end goal for increasing this measure of intrinsic value! Sooner or later, I reassure myself, a higher level of value in the portfolio will translate into higher prices and profits.
Meanwhile, though, it surely is nerve-wracking to see the market worth of our total current holdings just going down year after year, and now, even in the fourth year, still further down, week after week. Of course, as I see the quality of leadership and the state of our geopolitical affairs, it is easy to understand why the ordinary investor is leery of stocks in general.
2/24/03-Recently on popular TV business programs there have been suggestions that our current investing and financial situation is similar to that seventy years ago, in 1933, deep in the Great Depression. But this is not my concern. I am not a market timer. If I were, I probably would think such allusions, from a contrarian viewpoint, are bullish. And, of course, I could be very wrong.
I am impressed, though, with a recent comment by Kenneth L. Fisher, in the latest (3/3/03) issue of "Forbes," from his article entitled "The Bipolar Market," p. 106, indicating that the best professional investors know that markets tend to revert to the mean. These investors thus grow more cautious when stocks are up substantially and more sanguine when they're significantly down. He feels the current market climate gives reason for optimism.
But, instead of timing, I try to find stocks that are selling at bargain prices compared to their future prospects and/or their current intrinsic value. This bottom-up approach has worked well in the past for value investors, regardless of the ups and downs of the major markets.
Here are some stocks that appear to me now to be excellent prospects over the next three to five years:
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This diary is intended for personal interest and general information only. You are advised to do your own research (as well as to consult highly compensated professionals) before spending money on anything.
I know of no reason anyone should take my financial musings seriously. At best I am a dedicated amateur providing a bit of investment-related insight and entertainment, at worst an amusing diversion.
My wife, Fran, and I may at times own shares of some of the assets mentioned here. But neither of us receive any benefit from reference to them, unless you count the mutual misery when we get it wrong, or the opportunity to gloat when we get it right.