Thursday, October 19, 2006

I feel like this some times...

This cartoon made me smile :)

I'm a contrarian investor because largely I'm a contrarian person. I see the weird side of things. I've always felt somewhat outcast; I don't see others as being above or below me, but rather sideways on a different plane. My paranoia and distrust of giddy group-think makes it hard for me to want to participate in the recent market rally. It's kind of like taking pride in being a member of the high school chess club instead of being the dunce who is dating the popular cheerleader. Or is this just rationalization?

I'm mostly cash, aside from a few heavy positions I'm comfortable with being quite long on. I'm still waiting for the market adjustment, a.k.a. "reversion to the mean" to give me a chance to buy stocks at better valuations. I plan to rebuy some that I got stopped out on like MOT, and others that never dropped enough to be attractive (I waited in vain for AAPL to hit $50, and it came within $0.16. Now it's up almost 60%. But those who beat themselves up over hindsight are the type to have bought into the dot-com bubble at its peak.)

Over the past year I have started to reinvest in a few select areas that I think have long-term potential for very solid growth. I'm up only 0.01%, thanks to two strong positions (up 5% and 17% this year) and two weak positions (down 10% and 6% this year).

I think of my mistakes as the cost of education, and I need to work on my timing. Like the Bear in the cartoon, I'm a little too eager to call a downturn. When I lose, it's by buying too early on the downside and selling too early on the upside (or setting limit orders that are too conservative/pessimistic). But that's far better in my opinion than buying too late on the upside and selling too late when a stock tumbles. My approach would not have gotten me burned on the dot-com bubble (had I any money then), but it would not have gotten rich either.

No comments: