Thanks for the Value Plays

It's been a rough year, but what better time to reflect on the value of what we find and what we have?

Today is one of the busiest travel days of the year. It is that time when we willingly endure packed flights, crowded trains and cars full of crying children on gridlocked roads, heading over the hills and through the woods to Grandma's house. We will gather around the table with those against whom we still harbor a secret grudge for tearing the head off our G.I. Joe action figure (with the kung fu grip) 30 years ago and give thanks for all the good things life has to offer.

I will be where I always am on Thanksgiving, in my house surrounded by kids and friends, cooking, drinking good wine, and watching football. It is my favorite holiday, a time of year when I stop to think about all the things I am thankful for in life, and in business.

I will spare you anymore of the personal stuff, but I will say that even in these confusing and confounding markets, there is much for which to be thankful.

First and foremost I am thankful for an investment philosophy that has served me so well for so long. Twenty-five years ago a very kind mentor took a very confused young broker and taught him the basics of asset-based, deep-value investing, and I took to it like a duck to water. Warren Buffett once said value investing either made sense right away or it never does. To me, it made sense.

I like how it minimizes market direction and forecasting within the investment equation. I may tweak my position based on my market perceptions, but when I find a stock too cheap not to own, I buy it. At times when I am wildly bullish, as I was in 2003, I will buy up to my limits, and even use a little margin and options strategies to average into positions. When, as now, I am still pretty skeptical, I buy smaller positions and keep cash levels high so I can average into what I think will be falling market prices.

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At the time of publication, Melvin was long on all of the stocks mentioned, except for Southwest, although positions may change at any time.

Tim Melvin is a writer from Stevensville, Maryland, who spent 20 years a stockbroker, the last 15 as a Vice President of Investments with a regional firm in the Mid Atlantic area. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Melvin appreciates your feedback; click here to send him an email.