Lucius,
One of the primary arguments of the books IMO is that you can identify future gorillas before they become gorillas. This supposedly can help make us rich. I think the test portfolio is showing that at least in the past year the author's up-and-coming gorilla hopefuls aren't doing so well as investments. Perhaps it's more difficult to "find the next Microsoft" than the authors estimated.
That said, I'm not giving up on this strategy, because the big trends in the book, especially the stages of adoption and market dominance do apply to the tech space. The rewards of victory still accumulate disproportionately to the victor.
I am going to start putting valuation limits that I will accept on stocks such as these though, and try to not overpay for the gorilla potential. This is something I think the book did a very poor job of. "How to value a gorilla".
The book essentially says buy a gorilla and hold on until it's prospects turn down. I would've liked to have seen some in-depth analysis on historical price trends for current gorillas as they were coming up. i.e. what did their P/S, PE, P/Bk, Sales growth, etc look like over time. I've done a little bit of looking back and have decided not to pay more than 5X sales for a good gorilla candidate in the tornado. I'd much prefer a PS of 3 or less, but 5X seems to be OK for a good candidate in the tornado. The bottom side risk is so large, and the volatility is so great on these kinds of stocks I think picking an entry point is crucial. 10X sales seems to be a good selling level, as it is a difficult level to sustain.
Shane
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