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By Michael Breen | 05-29-2009 10:27 AM

Rogers: Keeping Your Wits in a Tough Market

John Rogers of Ariel and Ariel Appreciation discusses staying disciplined when fundamentals and stock prices part ways.

Michael Breen: Greetings. This is Mike Breen coming to you from the Morningstar Investment Conference. I'm fortunate enough to have John Rogers of Ariel Investments with me. How are you?

John Rogers: Glad to be here.

Breen: We just had a great panel with you and some other small-cap/mid-cap managers. And a common theme, sort of a tough year last year for a lot of folks. A lot of the same names that were down last year are back in the last three months. We've discussed this, you and I, but I've just been wondering how you stick to your discipline in a tough year like that when the fundamentals, in your opinion, look great, but the stock is diverging.

Rogers: Well, there are a couple of things. I think, first and foremost of course, you have to recheck the thesis and talk to everyone you can. You've got to go and talk to the management of the company over and over again, talk to the board of directors, you've got to talk to the sell-side analyst, you've got to talk to your competitors and peers who own the stock or don't own the stock for a reason. So you've got to check that thesis in as many places as you can when a favored stock is really out of favor. That helps to inform your judgment about whether to add more or not.

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