If you want to sleep well at night, you could put your entire portfolio in Berkshire Hathaway, not look at it for five years and likely beat the market, but during periods of panic you can make more money on beaten down, more volatile stocks. This is only a strategy for people who can withstand a lot of ups and downs.
As an example, we recently added to our position in Sears Holdings (SHLD), which we think the market misunderstands. We think intrinsic value is upwards of $250 per share versus the current price around $110. But it's hard to pick a bottom here. Our analysis hasn't changed since we first started buying late last year with the stock near $130 and we had to endure a drop below $85 only a few weeks ago -- which gave us an opportunity to buy more.
Last updated February 06 2008: 10:16 AM ET
