MUSA

**joenny99** Tue Mar 08, 2005 3:23 pm

MUSA
Blast,

you recommended MUSA (sorry forgot the previous code for it) way earlier before, and set the target at $14. If memory served correct, you dump it around $11.

First, as long term, why didn't you wait till it reached your pre-set target.

Second, MUSA currently pricing at $24, which is much higher than your target. If anyone that followed you was long enough, it'll be 400% return by now, rather than maybe 180%? Is there anything we can learn from this? Thanks.

**jeep** Tue Mar 08, 2005 10:40 pm

I think Blast (maybe it was Peter Lynch? well every investor does I suppose) mentioned somewhere else that he had some misses: didn't sit on a rise long enough.

For "first", IMHO, blast sometimes does sell a position too soon (already with a handsome profit though). I personally think it's something inherent wtih value investing: if you have another *sure* pick that is very cheap, you sell something in your hands close to fair value and go for it.

For "second", I think the issue here is value investing has to be based on "value". Some companies grow faster than usual, some companies gotta discovered by analysts and become public favorite, and stock price change because of things like that is very random. You can't expect it, and you can't bet on it. It's not possible to buy at the lowest point and sell and the highest point. There is really nothing to regret about the $24.

My two cents, blast may think totally differently.

**blast_investor** Wed Mar 09, 2005 12:25 am

Very good question. MUSA old ticker was MLT.

Jeep, excellent comments on this issue.

Although different value investors are different with their own style,
or with some personal "touch". the essence of this investment method is same.

When a stock reach "fair value" price, it will have more risk inherent in it so that I may sell. However, that does not mean it will drop after I sell. After I sell, sometimes it will drop, and sometimes it will rise further.

In another word, when I sell, I do not know whether it will rise or drop afterwards. I probably do not care.

I do not pretend to be so smart that I know exact the bottom or exact top. Actually I do not know. It is exactly the same attitude in Peter Lynch' book. By the way, do not assume Mr. Lynch or Mr. Buffet knows exact top or exact bottom. They do not in my opinion as well. This is very obvious from Mr. Lynch book or from past Mr. Buffet investment records.

Now, what I do have expertise is to make money with this "value investing" method, huge money as shown in my past performance in 2003 and 2004, all beating index in big way. This is also exactly what I am doing for BIRTP service to help people make big money safely and consistantly.

joenny99, If you insist that you want to profit with predicting exact top or exact bottom, that will no longer be a value investing method. As far as I know, no existing value investing method can predict exact top or bottom for a stock price.

**blast_investor** Wed Mar 09, 2005 12:35 am

Although I clarified in above post on this issue, how can we explain the "unpredictability" of exact bottom or top for value investors?

Very simple, value is not the "ONLY" reason for a stock to rise. There are many other reasons for a stock to rise, for example:

(1) Wall Street analyst upgrade causing more and more mutual funds buying even after the stock price is pretty expensive. WS analysts upgrade or downgrade is nonsense, they may upgrade a very expensive stock sometimes, and they downgrade a dirt cheap value stocks another times.
(2) manipulation of insiders. Insiders may push up the price to unthinkable level with manipulation of accounting method, cheating, or direct money involvement of aquiring stocks in open market.
(3) General market sentiment. The higher the sentiment, the more likely a stock can rise significantly above fair value.
(4) Sector market sentiment. The market is so bullish on this sector so that value no longer matters. Even after a value investor found the pick unattractive after big run up, the stock rise further any way.
(5) By the way, in stock market, sometimes a stock can rise more just because it is "rising" fast. No other reasons, "rising fast" is the reason to rise more. This is called "pyramid" phenomena. Lots of "smart" traders or investors shorted bubble stock because it was over-valued and ended up losing shirt. Stock market is not as simple as it appears.

All these can explain the MUSA phenomena. it rises way above my target.

By the way, I can find above 5 reasons to explain the rise of stock price after it reaches fair value. I can find another 5 reasons to explain the drop of stock price after it reaches fair value. It goes both way. The value investors' attitude on this is "do not care". I exited the position, up or down no longer matters. Trying to learn too much from this does not help anything. What I do suggest investors to do is to analyze the past performance (stock portfolio or mutual fund) to SP&500 index: 1 year, 3 year, 5 year , 10 year and ask hard questions if the result was big under-performing in comparison.

My opinion on MUSA now is very clear, avoid. The steel sector is not safe place right now. Do not be fooled by its low PE. Cyclical stocks have their own business cycle and the risk is pretty high.

**joenny99** Thu Mar 10, 2005 2:02 pm

thanks for all the comments and inputs,

It's always appreciated to be able to learn from you. Thanks so much!

**blast_investor** Thu Mar 10, 2005 2:56 pm

You are welcome. Feel free to ask questions here. I will try to answer as much as I can if I have time. :D

joenny99 wrote: thanks for all the comments and inputs,

It's always appreciated to be able to learn from you. Thanks so much!