Value Investor: The Good, The Bad and The Ugly

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Value Investor: The Good, The Bad and The Ugly

Written by David Neubert

Monday, 14 July 2008 14:51

As a value investor, this recent market pullback has been good, bad and ugly for me.

Good: I'm getting the opportunity to buy quality companies and cheap-long term prices. Recent buys include Proctor and Gamble (PG - $63.38), Pepsi (PEP - $64.55), Coca Cola (KO - $51.00), General Electric (GE - $27.10) and United Technologies (UTX - $60.38)

Bad: My bet on oil stocks isn't paying off the way I had hoped in this rising oil market.
Ugly: I got the financial stocks totally wrong. At first it all looked like overreaction (which I think it still is but real value has been destroyed at many financial institutions). I think they are a good deal now but I'm already at my limit for sector exposure. After realizing that I couldn't predict well enough to avoid the next Bear Stearns (BSC - acquired by JPMorgan) I started buying the Financial Sector ETF (XLF - $18.11), expecting a breakneck rally of short covering. That breakneck rally is still out there, but I'm not sure it's going to help me since I started buying the XLF in significant size at $22.00.

For some common sense advice about value investing in falling markets and how to avoid common value investor mistakes, see this article by Arne Alsin at TheStreet.com.

Disclosure: I own and have purchased in the past week: PG, PEP, KO, GE, XLF and UTX. I own JPM. I bought BSC the Friday before the take out at around $30 and sold it the following week at around $10.