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Dr. Stephen Leeb on Commodities and Inflation - Is He a Genius or Alarmist?

Great review. Thanks! This fits with my own notion of recovery in the hard asset countries who can export to a spending China.

The 15 Most Cash Rich Companies

Author seems to allude to vague acquistions while ignoring that two on his list, Pfizer and Wyeth, are merging, much of Pfizer's cash, and ultimately Wyeth's will be going to the acquisition financing.

Are Dividend Growth Investors Idiots?

I enjoyed your article and I don't think we're in disagreement fundamentally, the distinction I was attempting to make,and I guess poorly, wasn't market timing. It's capital preservation.

By way of example, back in September, The dividend newsletter of Morningstar was touting CSE (Capital Source) around 23-35, nice dividend, etc. 5 months later, after its mess with bank buyout, it was at 10 and is still around 10. an 8% stop would've gotten you out around 21-22. If you believed in the company, after doing additional analysis still, you could have almost doubled your position with the same capital. That's the key here - you have your capital, you haven't risked new money, and you still have the opportunity to buy value and a good dividend. As you know the market is littered with good dividend payers (Lucent?) that went to zero. I just don't want to take that ride.

I definitely buy into the dividend investing model, but I also very much like to protect against the permanent impairment/loss of capital.

I look forward to future articles.

Are Dividend Growth Investors Idiots?

Oh, now that's a little disingenuous. Lynch was a fund manager with a vested interest in managing your money. Buffett well, he's as much a private equity buyer as anything and had an enormous float cache from his insurance companies to buy from so he could act opportunistically whenever he felt like it. Interestingly, he wound up buying a bunch of companies I'd invested in Dairy Queen, Franchise Finance, Fruit of the Loom and a couple of others which robbed me of a good long term investment. :-)

If you're buying, you should be buying after that 50% loss. The truth is, Peter Lynch as a fund manager could not have stayed in his post being brilliant if he either didn't trim losses quickly OR averaged down so much that he could help but show a gain a few months/years later. I don't know if I'm sold on averaging down, I'd rather dump out at 8% max and then if the thesis on the company is still solid but just had a one time "event" i.e. a strike or power failure at aplan or other such issue that gave me a better opportunity to buy cheaper, much cheaper with capital I've preserved. Best to all.


On Jun 21 10:05 AM silverwolf wrote:

> hi Lynn, I just wanted to point out what Peter Lynch and Warren
> B. reminded investors in the past. If you can't watch your stock
> fallling 50% of the value and have to sell it, then you can't be
> a investor in stocks. If you hold a quality company and the stock
> drops in price without serious flaws in business fundamentals then
> you should hold on to the stock regardless price drop. Otherwise
> you will continue to lose your capital. If you look at most high
> quality stocks that kept going up in the past in the long term, most
> of them fluctuate about 50% from year's highest to year's lowest
> price. If you decide to sell because it dropped 8%, you are just
> going to lose your capital on a really good stock, assuming you did
> your homework in picking strong business fundamentals.

Are Dividend Growth Investors Idiots?

Anyone who would ride out a 15% correction in their portfolio when they could have hedged or gone to cash is foolish. It's about money management - selling the principal under winners to recover your capital and not tolerating more than X% of a downturn in any stock any time - trail those stops. We're heading south hard right now, and we're not done.

I Guess This Means AIG Stock Will Rise 10% Tomorrow

Don't worry they have a plan to "make it up on volume!"