Thanks in part to abysmal performances by First Marblehead and Select Comfort, my portfolio is sinking like a rock. It has now dropped decisively below two of my favorite benchmarks: Berkshire Hathaway and inflation + 10%. Worse, I think the official measure of inflation I use is understated and Berkshire is undervalued. Meanwhile, the S&P 500 index is "gaining" ground (by dropping less quickly than my IRA), so the recent past has been harsh.
Nobody likes to be wrong and the standard response to a situation like this would be to say that luck turned against me. Owning two companies that have been particularly hard hit by the housing and securitization busts might seem like unfortunate timing except that I've bought both companies on the way down knowing the strikes against them. It's ugly and I can't blame luck.
The good news would be that I haven't actually lost money on these shares. Both companies will see their fortunes reverse in a few years. I expect current prices will seem unimaginable. Further, there is no particular reason for me to sell these companies until their fair value is reached. So I need to ignore the stock charts wiggling up and down for the moment.
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