A Cigar Butt on the Tracks...
Rallying markets often make value investors nervous. In a bull market it becomes increasingly difficult to locate companies that are reasonably priced, offering attractive dividends and operating in a stable, easy to understand business. Six months ago I was not restricted by the supply of attractive issues but rather the supply of capital at my disposal. Currently, the opposite is becoming true.
In these times, I attempt to emulate the strategy of Seth Klarman, founder of the Baupost Group. Klarman is noted for carrying a large cash position in addition to retaining a healthy amount of pessimism about market conditions. Despite the unattractive prospects of large cash holdings, there are methods available to investors...
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