From: kastnna 
Newsgroups: misc.invest.financial-plan
Subject: Re: market vs. limit orders
Date: Wed, 17 Oct 2007 09:12:11 -0500
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On Oct 17, 12:13 am, Ron Pthose
> I am a value investor preferring low p/e and low p/b stocks. I did
> better than average over the past 3 years in 3 accounts (regular and
> two IRAs). The problem is that most of the value stocks are in the
> small cap category and the amount of stock in dollar terms is limited.

Congratulations. However, I was commenting on the OP's statement that
EVERYONE, even the uninformed, could regularly outperform the market.
A wealth of historical studies and the S&P Index versus Active (SPIVA)
report has repeatedly shown that active funds have not kept up with
their respective benchmarks. There are obviously funds that do
outperform, and I commend you for your ability to choose them. Data
suggest the Average Joe will not be so fortunate.

I agree that many investors prefer to go with the larger companies
that they know. Investor aprehension is probably one of the reasons
this strategy has historically worked. My point was that IF everyone
began investing this way, as the OP suggested, simple economics would
eliminate the "advantage". Everyone seeking out the limited number of
stocks that have low p/e would increase demand and drive up the price,
thus eliminating the ability to "get in cheap". A few investors that
were ahead of the curve would still make a tidy profit, but the masses
would not.

The real question should be that if everyone begins using your method
(i.e. stock screeners), what then are you going to do to not become
one of the unfortunate masses? I've read some novel insights on why
the informed investor NEEDS the uninformed investor to maintain his
market advantage (and profits). IOW, if everyone were exactly as smart
and informed as you, how would you then "get in cheap" on an
investment?