Re: Why are value investor types so rigidly opposed to TA?
Hun,
Buffett increased his net worth to $30m or so through fees from his partnership. I would guess his initial investment in Berkshire was most of that net worth. He's taken no fees over the 45 years or so he's been CEO and his pay has always been so small as to be nominal ( I think $100k a year last I heard). So Berkshire is a pretty good testament to the power of FA over long periods.
And value investments that require the whims of the market to recognize value are often called "Value Traps". I don't buy investments that require traders to trade up my stock to fair value, my picks always have catalysts. A catalyst could be as simple as increasing earnings over time, if the market assigns a too low PE for a stock and it doubles earnings, the stock would double even if the PE stays the same.
In the case of my example I am paying $14 for stock in a company that mgmt intends to sell for $50 per share. It all involves finding the right buyer who can monetize a very valuable asset without adverse tax consequences. They could find one tommorrow, or it may take a few years, they may grow in value during the wait and sell it for $70 per share. You can see how this example doesnt require the market at all to monetize my investment, aside from the unbelievable entry price it is giving me to create my position.
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