I try my best to use the principles taught in Graham's book to buy individual stocks at great valuation. I've found over the last 20 years that I can get added return from selling a portion of these stocks I hold when the prices seem high relative to Graham type valuations and then buy those shares back when the prices seem low.
Recently, I have added some technical analysis (discussed here in our Suite101 TA Discussion Topic) into my buys and sells which has helped me to get even better prices.
Do you have the time?
I think this is the key question casual investors should ask themselves. "Do you have the time to monitor your portfolio on a regular basis to sell some of your securities when they are at the high end of a valuation range and to buy them back when they are low?" You should also add in the time needed to read newsletters and investment reports for the companies you own so you are well informed about them. You will still have the occasional Enron, WorldCom, Lucent, Tyco etc. meltdowns where the business looked good and analysts loved the stocks and were wrong. Getting slaughtered in a stock pick now and then is a given for investors. If all this is too much for you, then I think following John Bogle's advice to buy index funds with 95% of your assets is the best advice out there.
DISCLAIMER: Answers & my words are general in nature, are not meant as specific investment advice, and do not necessarily represent the opinion of anyone but Kirk. Individuals should consult with their own advisors for specific investment advice.
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