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Old Republic International Corporation Message Board

  • the_millionaire_next_door the_millionaire_next_door May 12, 2004 2:57 PM Flag

    B. Stein and Market Timing

    A while back I had a discussion with PlayTheKeys (whose messages I always read and enjoy) regarding using the S&P500 as a benchmark for investments. I also discussed using Ben Stein's approach to investing in the S&P500.

    I just thought it would be of interest to note that according to inflation-adjusted historical numbers both the P/E and Price-to-book are below the 15-year moving average. These are two of the six indicators that he uses in his study of US markets over the past 80-100 years. Obviously the more indicators that are positive, the better, but for me two or more is a good thing. I am now in the mode that I dollar-cost-average from a fixed-income fund (not bonds - I don't own any right now) in my 401k to a S&P500 index fund in my 401k. I am doing the same thing in my wife's 403b. I had stopped buying any stock index funds around the end of summer of last year as prices climbed from their lows. The contributions just accumulated in funds that were guaranteed income and no loss of principal until now. I'll keep this up until my fixed-income fund dries up or the S&P500 becomes pricey again.

    This is something that I am only doing in my 401/3 accounts. I also have taxable and Roth IRA accts, but have no uninvested cash in those (plus it's more expensive to dollar-cost-average in those accounts). IMO ORI looks to be very cheap here, but I have a fair amount already and don't want to tap my emergency fund to buy more.

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    • Thanks, Millionaire and OU. As you know I think investing in individual stocks is the most efficient and rewarding way to play the market if you can. However, the technical note about the S&P under Ben Stein's system is an interesting data point. I can tell you that earlier in the year I set a sell target for another financial stock, placed a limit order, and it didn't quite make it. No matter, when that stock re-approaches it, I will do the same thing. Earlier this week I placed a buy limit order on another financial stock I'd long done DD on, and darn if it didn't hit it at the end of the day on Monday! I'm still pinching myself over the price I got for this franchise.

      Neither of those two issues are ones whose message board I participate in, so don't go looking for them. I hope that helps further the discussion, though.

    • I've never read Stein's book (I saw his TV show when it used to be on), but it sounds like you are disciplined and using good value strategies (e.g., buy low). I wish I had been as good of an investor when I was your age as you are now. I'm still not!

      I agree, I believe ORI is a long-term buy at these prices. I bought more a few minutes ago. But no one buys at the exact bottom. So it could go lower. If it does, I'll buy again.

19.21+0.14(+0.73%)Aug 25 4:01 PMEDT