WEB:The Oracle of Omaha- Warren Buffett: Price for a cherry consensus

» Kirk - Price for a cherry consensus

Here is an interesting article that makes a good case for ONLY adding new money to the stock market AFTER it has had a 15% pullback. It reminds me of how I first started to buy individual stocks... after they want on "sale."

http://biz.yahoo.com/ms/031015/97720_1.h...

So the "buy low and hold" strategy has, over the past 63 years, produced long-term stock market returns far superior to the "buy high and hold" strategy. There's nothing too controversial in that; everyone agrees that buying low is better than buying high if you're planning to hold onto your stocks for a long time.

This reminds me of what Buffett does... looks for securites he thinks have great value AND are out of favor. THEN he buys them. The article talks about the whole market while Buffett does it for market sectors he likes and understands. Those that subscribe to my newsletter know I do much the same with the stocks and sectors I buy. I enhance my returns by selling "some" of my position when the market likes my stocks or sector ETFs and I buy back or "add to my position" when the market doesn't like my stocks. Rather than holding, this has me selling as the market rises and buying AFTER it corrects. What is intersting is my strategy would enhance the returns this article speaks of. My method of telling me when to sell is "asset allocation."

  Date       Kirk    S&P500   Delta
2003 YTD    +58.4%   20.7%    37.7%  as of 10/14/2003 
 

                                Kirk   S&P500+  NASDAQ 
4.75+ Yrs 12/31/98 to 10/10/03 141.0%  ( 9.2%) (11.8%)
Annualized Annual Return        20.2%  ( 2.0%) ( 2.6%) 
 

9/30/98 Inception Value:   $100,000
9/30/03 5 yrs later value: $345,395 up 245.4%
S&P500 between 9/30/98 and 9/30/03: up   4.6%
With dividends reinvested. All Numbers unaudited. 
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-- posted by Kirk