Then it certainly isn't worthwhile for you to do any valuation exercises. Thus, I would never suggest that you do any. And I will acknowledge that you may well be right. I will admit to curiosity as to how you reached your conclusion. After all, if you have evidence that my efforts are a waste, I could be convinced to do less work.
It seems to me that there are several different roles that valuation metrics might play. If one computes these metrics along with all of the rest that one does in the process of profiling a potential Gorilla candidate, then one has that much more information. While the dominant criteria need to be qualitative, both in identifying the candidate in the first place and in deciding whether or not it really meets all tests, valuation metrics might well provide some extra information, e.g., a candidate that looked attractive in valuation might be one in which one might more easily take a starting position or, vice versa, one which looked particularly unattractive, especially in comparison with other gorillas, might be subjected to particularly intense scrutiny before taking a position. Both positions might likewise be modified by perceived or expected trends.
This is quite different than using valuation to choose between alternative investments. It is all very well to say "Given three candidates which are equal in all other respects, one should choose the one with the most attractive valuation metrics" (not a quote, a statement of proposition). The problem with this position is that the first part of the proposition is never true. In G&K there are always going to be important criteria to distinguish among choices. This might be based on one's current positions or how secure one was in understanding the specific technology or some difference in position in the TALC or the quality of the value chain or the growth rate of the tornado or or or, but it seems to me that all of these are likely to be more important to most of us than any valuation screening. Valuation helps to confirm a choice or send us back for further study, but not to choose which primate among several to pursue. IMHO anyway. |
