How do value investors live day to day?

Discussion in 'Professional Trading' started by Alex the Great, Apr 10, 2007.

  1. Many value investors hold their positions several years before selling. How does a value investor pay a monthly bill if their next stock sale is in five years? Mustn't a value investor do something else in between liquidating long term positions to generate cash for day to day expenses?
  2. gkishot


    Bonds. Real estate. Cash.
  3. Liquidate stock and spend it as needed. You don't have to liquidate the whole porfolio.
  4. Ever hear of dividends, covered calls, calendar calls, etc??
  5. dhpar


    to start with you always should run your portfolio with a cash bucket - usually monies for the next 2 years put aside suffice.
    Your decision about a position must not depend on your consumption pattern!
  6. danoXP


    They pay their living expenses with the time and money they save on trading fees ;)

    Here is a buy and hold from 1958. The dividend is now quite substantial. And tell me when you would have "sold" and bought back in ... as a trader.
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  7. Being a value investor doesn't mean you have to hold forever.

    You CAN just hold until its reasonably valued. Admittedly you might leave between 40% and 150% on the table, typically, but if you exit you aren't taking the risk it wil sink back down, either.

    To use the example above, I bought a large XOM position around $45 and exited around $60. At $45 it was silly-cheap and I was quite happy to walk away with $15 a share in profits. Ok, it went lots higher, and i missed that upside, but then again, I found another, MORE undervalued stock around that time, and have now doubled on it, since.
  8. i consider myself a value investor, as well as daytrading YM scalper.

    iow, my longterm portfolio chock full of "value" stocks (and some growth and spec stuff, some hedging stuff, etc.), and I agree that one's value investment portfolio is not the best way to generate a consistent income stream. for example, in a bear market, value stocks can get even cheaper, and for quite some time. apart from dividends and/or covered call premium, you are not generating income on a consistent basis.

    however, that's what scalping futures is for :)

    value investing is for building wealth - longterm, not so much for generating a smooth daily equity curve
  9. Lets say I want a sailboat for family cruising The Greenwich to Maine thing) and as a tender for the runup competitions to the men's racing chanpionships.

    Since the bank feels boats sink and insurance is iffy, just collateralize the loan and pay interest only.

    A two year loan works out this way. you put the collateral in the banks street name and your broker deals with them when you do what you do.

    at the end of two years the bank sells a little of the stock and sends the rest to your broker.

    It works for any kind of needs.

    For the small stuff like living you just peel a little here and there.

    Look at HOV as an example. I asked MR market to pick it up. It ran from 10 to 80 in less than 2 years.

    NTRI is same kind of thing for traders.. 4 trades a year only eat up 12 days and the ev retrunr is 30% per. this compounded does put filet on the table.
  10. I dunno. Maybe write a book while they are sitting around for years waiting for value. write a book and call it something like "Investment Biker" and then live off the proceeds of that..

    Then later on get some silly looking vehicle and get a lot of <strike>suckers</strike> sponsors to pay your way around the world to eat and drink and then write another book about it and make more money...
    I dunno.
    #10     Apr 10, 2007