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Strategies & Market Trends : Value Investing

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To: James Clarke who wrote (837)4/18/1997 10:24:00 AM
From: Michael Burry of 53749
 
I mentioned that I pick stocks to short
based on valuation, not ratios (I ask you to find
the correct free cash flow -- I bet most
people don't kow they're working with
negative net working capital, either).
But I ENTER based on technical analysis.
KO could go up or down. The odds are down,
technically, but that's what buy stops
are for. This isn't a long term short by
any means. Research on shorts show that
profitable shorts make money with small
gains, not by waiting for businesses
to bankrupt. The small gains are usually
there for the picking. Another indicator --
if it's mentioned in Barron's as a buy
three different times <g> -- set me onto
Wells Fargo.

What's there to understand about Coke? The
business is a KISS model. This gets
to my value/short strategy. When
people start claiming a business deserves
a special valuation above all reasonable
fundamental analysis (because
of the "franchise", because there's so
little institutional ownership for
a big cap growth stock, because Buffett's
in it, because global expansion will
provide endless opportunity, because
ROE is so damned high, because it's
nearly a monopoly, because Buffett's
in it...), that's a short, IMO.

I just read a bunch of Graham, and he doesn't
deal with shorts (I assume it would
be "speculation"), but EMT isn't all
that its panned to be either, IMO.

Just trying to think independently,
Mike
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