Others Can Partake in the Mad Scramble

One of the questions I am often asked, especially after I pen the sort of columns I did last week -- which expressed incredulity about the current market levels -- is whether I am worried about missing out on gains if I am wrong and underinvested. It's a legitimate question because, as one reader pointed out, I am not great at selling. I am often wrong and always early in my selling endeavors. I am aware of this. It's the reason I will only use chicken shorts involving put spreads when I bet against overvalued stocks. I am highly allergic to margin calls, and if I outright short a stock, I am almost surely going to get one. The truth is that I don't worry about being underinvested, and that's because I'm not seeing many opportunities that fit my stringent asset-based value criteria.

When markets stage powerful rallies from overbought levels, my little safe-and-cheap stocks tend to outperform by an enormous margin. Big money is looking for cheap stocks to participate in the rally, and mine more than meet the test. Even the smallest of them will see institutional buying as money floods into the market looking for a home. This tends to create significant outperformance in safe and cheap stocks, and it more than offsets the high cash levels I am carrying....619 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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