When Fund Managers Change Their Minds

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.

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