Comments on: How To Recover Losses http://www.fwallstreet.com/article/35-how-to-recover-losses/ Value Investing Blog Mon, 16 May 2011 10:55:06 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Chris Bourque http://www.fwallstreet.com/article/35-how-to-recover-losses/#comment-2423 Chris Bourque Fri, 07 Nov 2008 03:33:49 +0000 http://www.fwallstreet.com/article/35-how-to-recover-losses#comment-2423 In Joe's Walmart post, he talks about how even if you bought at a cheap price in the early years, sometime after the first 5 years you would be down about 50% of your original investment, and you would be thinking that your investment is definitely more valuable than that. After another few years, you hit the break even mark, after all those downs you still seriously think walmart is undervalued. Another few years ago by, walmart is realized and gives you an annual return of 33% per year on your original investment (numbers off the top of my head) but you get the idea. If the value of your business drops below what it is trading at, that's when it's time to sell, because the best you can do is hope that someone else will pay a higher price than you for the business. Over time, price follows value so that means you would be speculating if you held on. If there is still a margin of safety (albeit not as big as when you first bought), you can consider holding on or you can look for better opportunities. It can be a holding spot until you see a better opportunity. In Joe’s Walmart post, he talks about how even if you bought at a cheap price in the early years, sometime after the first 5 years you would be down about 50% of your original investment, and you would be thinking that your investment is definitely more valuable than that. After another few years, you hit the break even mark, after all those downs you still seriously think walmart is undervalued. Another few years ago by, walmart is realized and gives you an annual return of 33% per year on your original investment (numbers off the top of my head) but you get the idea.

If the value of your business drops below what it is trading at, that’s when it’s time to sell, because the best you can do is hope that someone else will pay a higher price than you for the business. Over time, price follows value so that means you would be speculating if you held on. If there is still a margin of safety (albeit not as big as when you first bought), you can consider holding on or you can look for better opportunities. It can be a holding spot until you see a better opportunity.

]]> By: Amit http://www.fwallstreet.com/article/35-how-to-recover-losses/#comment-2419 Amit Thu, 06 Nov 2008 21:09:24 +0000 http://www.fwallstreet.com/article/35-how-to-recover-losses#comment-2419 Imagine this scenario: 1. You bought a stock, you realized you overpayed 2 years later. (value has dropped since, in FCF) BUT... You know the business has laid the foundation for future growth despite sagging economy. 2.This growth will manifest in increased operating margins from 1)inevitable price hikes 2)exploding demand and will ultimately lead to higher CROIC (compared to an acceptable 14% during saggin economy) The question is: Would you feel safe in HOLDING your position knowing you may have overpayed by as much as 25%? I'd love to hear your POVs Imagine this scenario:

1. You bought a stock, you realized you overpayed 2 years later. (value has dropped since, in FCF)

BUT…

You know the business has laid the foundation for future growth despite sagging economy.

2.This growth will manifest in increased operating margins from

1)inevitable price hikes 2)exploding demand

and will ultimately lead to higher CROIC (compared to an acceptable 14% during saggin economy)

The question is: Would you feel safe in HOLDING your position knowing you may have overpayed by as much as 25%?

I’d love to hear your POVs

]]> By: John http://www.fwallstreet.com/article/35-how-to-recover-losses/#comment-2117 John Sun, 21 Sep 2008 17:51:33 +0000 http://www.fwallstreet.com/article/35-how-to-recover-losses#comment-2117 Interestingly, though, Buffett held on to the investment until he got bailed out with a profit in 1997. But I agree with you, his system is all based on BUYing cheap. And if the purchase was wrong, even the master found it tough. Interestingly, though, Buffett held on to the investment until he got bailed out with a profit in 1997. But I agree with you, his system is all based on BUYing cheap. And if the purchase was wrong, even the master found it tough.

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