BRL Chart, page-421

I have no relationship with either Investor Jackson or Moosie. But some of their interactions on this board remind me of a Hong Kong movie called "Chicken talks with Duck". The metaphor is 2 people talking to each other on different wavelengths . . . or in different languages . . . and not understanding each other at all. That leads - sorta inevitably - to misunderstanding; perhaps even to animosity, at times.


For those who have no patience to read long-posts, my conclusion is that IJ and Moosie have fundamentally different approaches . . . not "wrong" but "different" approaches . . . to buying and selling shares of companies. IJ appears to rely mainly on the "weighing machine" approach, which purports to be objective in the long-term. Moosie appears to rely more (or in addition to the "weighing machine") on the "voting machine" approach, which purports to be more perceptive of pending price-movements in the short-term.

Personal bias here - I do not believe that "I" can successfully "time the market", so I focus mainly on growth investing and value investing approaches. I don't spend any time - at all - on TA analysis. I have a . . . probably smarter than me . . . son who relies heavily on technical-charting.

Let's be clear that my son's approach is not "only" charting. Like Moosie evidently does . . . my son also does other types of analysis. But my son is essentially a nimble day-trader with many, many, many more-times buys-and-sells of shares than my own patterns of trading - which is mostly buy-and-hold.

Both my son and I make money from stocks. In the short-term, my son trades more profitably than I do. In the long-term . . . well, he hasn't been severely burned (yet). Either way, his approach requires far more time spent on analysis than I have appetite for. We both feel that our personal approaches are worth the trade-offs.

The longer version follows below - mostly elaborating on what I've said already in the above 4 paragraphs. You've been forewarned, if you don't enjoy reading long stories, ya.

=====

My observation is that there are at least 4 styles-of/approaches-to trading shares of companies. (1) Income investing is mainly about seeking yield from dividends; (2) Value investing is about spotting mispriced shares; (3) Growth investing is focused on magnitude/size and probability of opportunity; and (4) Technical investing involves charting - including charting of considerations that may not be reflected in the other 3 approaches. Technical investing often also reflects decisions made across considerably shorter time-horizons than the other 3 approaches.

I highly recommend - to all - the second chapter of Alice Schroeder's terrific biography of Warren Buffett, titled "The Snowball". If you're especially pressed for time, the relevant bits are pages 11-18 of that 18-page chapter.

The chapter heading is "Sun Valley", and the content describes the now-legendary presentation that Buffett made at the 1999 Allen & Company conference in Sun Valley, Idaho. Buffet's first slide showed this:

31/12/64 - Dow Jones Average: 874.12
31/12/81 - Dow Jones Average: 875.00

While explaining that the Dow remained flat over those 17 years, Buffett also pointed out that the US economy grew 5-fold and revenues of the Fortune-500 companies similarly grew 5-fold over that same flat-lined-Dow 17-year period.

Buffett commented that the stock market is both a voting-machine and a weighing-machine. Weight counts eventually . . . but votes count in the short term. So for 17 years, voting said "The value of equities remains the same". While . . . in a sense . . . the value of what the Dow purports to be a proxy for had risen 500 per cent over that same 17 year period.

The most powerful US bull-market in history ensued over the following 15-and-a-bit years, ending in tears with the melt-down - beginning in March, 2000 - that followed the dot-com-bubble.


Which is to say that the voting-machine can OVER-shoot into unsustainably optimistic territory, just as it sometimes pessimistically UNDER-shoots credible real-value-creation.

And you perhaps already know the aphorism - aimed at investors who use leverage - that "The market can remain irrational . . . longer than you can remain solvent".

Keep in mind the timing of Buffett's presentation - summer, 1999 - months before the end of the dot-com-bubble. At the time, tech-investors considered him over-the-hill and badly out-of-touch. In hindsight, most now recognize his timeless investing-genius.

In any case, Buffett's approach does not appear to involve TA analysis. Which is not to say that TA analysis is wrong. More to say that some (many ?) investors benefit sufficiently already from Buffett's advice to invest for income, for value or for growth with a long-term time horizon.

I certainly don't claim any great skill in my approach - with respect to Bathurst - which relies mainly on a perception that BRL is significantly under-priced/under-valued by the market, given the cash it generates; given present margins based on coking-coal prices; and given the notional value of BRL's remaining lease-holdings.

I accept that I perhaps (even probably ?) leave money on the table by NOT incorporating charting and technical analysis to evaluate BRL day-to-day pricing-move prospects. But since I don't actually need the money put into BRL-shares in the short-term; and since I remain confident of significant re-pricing upwards of BRL in the medium-term . . . I'm comfortable riding this investment through the inevitable ups-and-downs that the voting-machine aspects of the market will cause.


Moosie and IJ - I have a lot of time for the opinions you offer about BRL prospects . . . both short and long-term. For the opinions you offer about each other: not so much time. My suggestion is that you both focus more on your own investing insights and less on commenting about each other's opinions. Peace!