The Third Pig

Actions in the Absence of Opportunity

Posted by Ben Taylor on August 15, 2007 10:13 AM


Prices are increasing when underlying values seem not to warrant it. The private equity firms, flush with cash, are fueling this fire. For the moment, there are not too many companies we have much interest in based on valuation. Part of what we have done in the last quarter is move our money into a couple of the index ETFs.


This might seem counter intuitive as we just told you the markets are showing some value trends we don’t necessarily like. But we are simply following a line of reasoning practiced by many value investors. We have to place our money somewhere while we wait for individual investment opportunities. One of the places we can park our money is the market itself. We think investing directly in the market is a sound approach if, relative to individual positions that interest us, the market offers safety in principal with some potential return. (As of this writing we have increased the allocation of our client portfolios in cash and bond holdings.) For a more complete discussion of where to invest in the absence of an immediate individual opportunity, check out the December 2005 Client Letter.

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