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re: Groupon: The dumpster fire of tech stocks
Posted on 11/20/12 at 2:58 pm to BennyAndTheInkJets
Posted on 11/20/12 at 2:58 pm to BennyAndTheInkJets
quote:
Value investing the Buffet way will not be nearly as profitable as it was during Warren's great run-up of the 80's to mid 2000's. That was a period of falling interest rates, disinflation, and a massive stock market rally. The pre-existing conditions for that will probably not return in any of our lifetimes.
If the whole "value investing" buffet approach isn't as profitable going forward, what are your thoughts on strategy? I get what you are saying- rates are bottomed out, growth will not be near as explosive going forward, etc. I'm always open to hearing thoughts and advice on what strategy might be best going forward.
Posted on 11/28/12 at 12:32 pm to Crbello4Hiceman
quote:
If the whole "value investing" buffet approach isn't as profitable going forward, what are your thoughts on strategy? I get what you are saying- rates are bottomed out, growth will not be near as explosive going forward, etc. I'm always open to hearing thoughts and advice on what strategy might be best going forward.
Sorry it took me so long to respond. Forgot about this thread.
The best strategy going forward, I believe, is global tactical opportunity allocation. By that I mean finding intermediate-term mispricing of assets based on risk. Unfortunately this is not an easy strategy because risk is so hard to quantify, but the biggest opportunities for growth going forward will be outside of developed countries.
An example would be to buy bonds in Italy or Spain at the steepest part of the yield curve in the 0-5 year area. That way you take advantage of the price appreciation you recieve from your bond "rolling down" the yield curve while maximizing yield at the time. The reason your risk is muted is from the ECB's OMT program that these countries can enroll in if they really need to lower borrowing costs.
This is not a new strategy, but it is the most appropriate for a low return world as you have to take advantage of the fewer opportunities present in the market. Declining corporate revenue and very low interest rates provide this low return market. Think of it as a slowly draining fish pond, with fewer and fewer fish as the pond drains. To be able to catch the remaining fish, you will have a good enough fishing pole (macro view) to aim exactly where you want to cast and a wide array of bait (tactical view) to catch any type of fish. You can't just sit in the same spot (US) and keep casting with the same bait (strategy). You have to be nimble and dynamic.
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