reload USG

**philzhang2004** Wed Jan 26, 2005 7:12 pm

reload USG
Hi, blast, if you only 5% of your portfolio is USG, when would you consider to add it to 10%? My main concern is if I add USG now, I will not have that much of risk protection than you do when you load it about 20$.

Is USG of higher risk or stocks like ADGO and EXX? My hunch is USG is more lawsuit based, and ADGO and EXX is more value based. Risk in law suit related stock could not be easily quantified by worst case scenario while risk in value stock like ADGO and EXX can be quantified by book value or NCAV. How do you quantify the risk in USG?

Thanks

**blast_investor** Wed Jan 26, 2005 7:28 pm

Re: reload USG
You can see my current risk/reward rating on USG ADGO EXX.
USG has best risk reward ratios among 3 right now.

USG is value based too and the main reason for investment is value.
By the way, lawsuit has value too on stocks. Of course, in my opinion, the lawsuit negative value is much smaller than what public or stock market in general are believing now.

Well, that is not problem. In stock market, it is OK to go against public. However, it is pretty dangerous to go along with public conventional wisdom.

philzhang2004 wrote: Hi, blast, if you only 5% of your portfolio is USG, when would you consider to add it to 10%? My main concern is if I add USG now, I will not have that much of risk protection than you do when you load it about 20$.

Is USG of higher risk or stocks like ADGO and EXX? My hunch is USG is more lawsuit based, and ADGO and EXX is more value based. Risk in law suit related stock could not be easily quantified by worst case scenario while risk in value stock like ADGO and EXX can be quantified by book value or NCAV. How do you quantify the risk in USG?

Thanks

**blast_investor** Wed Jan 26, 2005 7:29 pm

Whether or how much you add USG is personalized investment advice, which I can not comment on it.

**blast_investor** Wed Jan 26, 2005 8:25 pm

On quantifying the risk issue.

Yes, I believe risk can be quantified. I quantified the risk and reward in Hot List.

Of course, that is subjective and crude. Therefore, Hot List rating is only offering 3 types of scores (favorable, very favorable, extremely favorable).
Any rating below "favorable" is not needed because I will sell that pick if it is below favorable.

Of course, my quantification is very counter intuitive because it is very hard to accept that USG in lawsuit has lower risk than a non-lawsuit stock such as EBAY. Well, in my opinion, USG is safer stock than EBAY due to valuation difference.

However, no matter the degree of Hot List rating, stock market is not sure thing, therefore, diversification and money management is in the game as well.

Therefore, I usually consider BIRTP model portfolio as whole, not just seperate picks. Diversification and money management is key to maintain margin of safety and to obtain fat return year over year safely.

**blast_investor** Wed Jan 26, 2005 9:37 pm

philzhang2004

Your hunch may not be real. Let me explain here,

Sure ADGO or EXX appears to be safer than USG because of lawsuit issues.

However, there is hidden risk in all stocks. For example, cheating books, or management stealing company bank account, etc, or simply over-valuation. Therefore, lawsuit is not the only reason for risk, there are other risk as well.

All these risks have to be considered in value investing research. These are considered in insider buying, insider holding %, in listening to conference call, in past management behavior background checking, etc.

Of course, the end result is that value investors' risk assessment is very much against public mood or market hunch. But as you know, Warren Buffet is USG investor as well and his investment style is well-known for safety.

**qfhe** Thu Jan 27, 2005 9:33 am

I also believe the Congress (or Senate) will *eventually* pass the act (or whatever resolution) to settle down asbestos lawsuits. But until that becomes real, USG will continue to see big ups and downs like this. Politics is no easy job and it is not easy to pass the act. Last year they tried but failed. This year they have a better chance, but we still don't know for sure. Because we are not politician and we don't understand politics, I don't think we have much confidence in quantifying the risks. I am a conservative player and personally I prefer ADGO and EXX. These stocks may move slowly but surely (up).

Last year's big runup was driven by both value and news. When the news does not sound favorable, USG will go down for a while. But eventually, it will come back. JMHO.

**philzhang2004** Wed Feb 09, 2005 12:16 pm

how far can usg drop
down 11% today. Plan to reload. What's the good point of entry?

I consider usg a very volatile stock, and it probably makes sense to load at support level? 30$ is a support level, now it drops to 27?

**blast_investor** Wed Feb 09, 2005 12:27 pm

Re: how far can usg drop
Support is concept of TA, which I do not believe or use on a value stock like USG.

The risk of USG at $27 is certainly lower than the price $33 days ago. The cheaper the better. Nothing significant really changed on USG. Actually it did change to better, earning is up 80% plus year of year recently.

I will just hold on for the long term on USG. Whether the end solution will be from Congress, or from Court rulling, or else, USG investment risk/reward is very good.

philzhang2004 wrote: down 11% today. Plan to reload. What's the good point of entry?

I consider usg a very volatile stock, and it probably makes sense to load at support level? 30$ is a support level, now it drops to 27?

**blast_investor** Wed Feb 09, 2005 3:13 pm

USG has been very volatile over past few months.

Big rally up and then big correction as well.

Volatility is likely to continue. A decent money management (diversified portfolio plus dollar cost averaging investment) can smooth out some of up or down movement. This up or down movement typically has been news driven, either Congress action, lawsuit news, or President Bush' talk. However, I do not believe the intrinsic value or net worth of USG changed that frequently with the news. It is all short term phenomena.

In the end, volatility is something unavoidable especially for news-driven stock like USG. Emotions are high on stock like USG.

However, emotions do not have final say on stock price in the long run. I continue to believe in USG.

**blast_investor** Wed Feb 09, 2005 6:02 pm

Do not be scared by this USG action. Do not be scared by USG short's unwarranted misleading rumors spreading out in Yahoo msg board or somewhere else.

I am not afraid of volatility. I am ready to ride this USG investment for the long run side by side with all USG shareholders including the great investor Warren Buffet.

**grapes** Thu Feb 10, 2005 5:27 pm

load more?

blast_investor wrote: Do not be scared by this USG action. Do not be scared by USG short's unwarranted misleading rumors spreading out in Yahoo msg board or somewhere else.

I am not afraid of volatility. I am ready to ride this USG investment for the long run side by side with all USG shareholders including the great investor Warren Buffet.

**blast_investor** Thu Feb 10, 2005 6:29 pm

Due to diversification reason, I do not plan to buy more USG for the BIRTP model portfolio right now.

grapesmailbox wrote: load more?

**alex_li_98** Fri Feb 11, 2005 2:49 pm

doubled down
I got in at 33.5 :-( doubled down at 27.9 and brought my cost to 30.75. Not too bad...

Look like anytime there is a big drop it is chance to buy.

-alex