The Swiss fund manager and blogger who calls himself "Baruch" posted
a comment
on Saturday evening about Research in Motion, currently trading at about $105
a share:
I use a standardized DCF approach and have quite a detailed model of my own
of RIMM, both of which tell me it should be worth about USD200-250…
Come Monday afternoon, he’d changed
his mind:
Yes, we sold a bunch of RIMM today and I am not going to be inconsistent
on my blog…. It’s something to do with an ageing consumer portfolio;
at high multiples things have to be pretty perfect, super-duper DCF or not.
He defended this volte-face in his own inimitable manner:
This inconstancy would appear embarrassing to normal people, however it is
in fact the mark of an investing genius, I assure you.
I actually think he’s right. Traders, of course, have to be able to switch
from bullish to bearish on any given asset multiple times per day. But even
relatively long-term investors can and should change their minds every so often,
in much the same way as an actor might play a great Othello one night and then
play an equally great Iago in the same production the next. Even Warren Buffett
is buying
junk bonds and selling
puts – not the kind of behavior one expects from the buy-and-hold
Sage of Omaha. But all investing rules are made to be broken.