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Strategies & Market Trends : The Round Table: A work by the squares of the SNDK thread.
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To: Paul Senior who wrote (136)4/25/1999 12:04:00 AM
From: phoenix   of 194
 
Paul and Thread,
GARP, aka Growth at a Reasonable Price: The Concept

Growth is a good thing, but overrated. Sustainable growth is a great thing. Too often we get caught up in a particular sector because its growing, rather than examining the particular company to see if it has what it takes to sustain growth. Those companies that do will pay the real dividends. SanDisk is a perfect example of a growth stock that has sustainable growth. Why? Not because of the universal acceptable of their compact flash, but because of their patents. Otherwise, they could very well get squashed. Peter Lynch refers to staying away from the anteaters.

Kenneth Fisher says that a company's technology is really just a commodity. What is important is the relative $$ spent on research. He feels so strongly about this concept that he recommends evaluating the Price/Research of a company to see if it can sustain its growth. He argues that without sufficient resources dedicated to research, a company sooner or later will flounder. The conclusion here is when you evaluate a company's growth potential, you have to look at things other than the sector's growth potential.

All of this is irrelevant if you can't buy the company at the right price. To me the right price is something less than reasonable. That's why I need to see more value than just GARP.

Other opinions?

Roger

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