For all of us that are subscribers to the Gilder report (thanks Tekboy for that mishap that sent $295 out the door of my household via the phone line), we are all aware of that message on the site that asks, and I paraphrase as not to copy anything from the Gilder archives here!!!! :
Can you turn $10,000 into $17 Million (and some odd amount)?
Of course, the answer was by investing $10K at the beginning of Intel. Wow, that's a lot of reward for doing nothing beyond writing out a check for ten thousand years and years ago.
If you throw enough wads of $10K at enough pebbles that seem to shine or smell like future jungle - who knows or who cares where that $17M comes from in the end. The problem is, that type of opportunity doesn't come along quite that often - or does it? I think we would all settle for a fat lady here or there, but 17 fat ladies out of one $10K investment may or may not occur in our life time. It doesn't mean we won't accumulate a lot of wealth, but it does mean that $10K thrown at Intel and was never sold produced a handsome return. Now there's the trick and catch. Was Intel a shoe in for gorilla at the beginning? Was Qualcomm a shoe in back in 1992? Was Microsoft a shoe in? Was Cisco? What is that Cisco fat lady index after the intial toss of $10K back in 1990 now. Five, six - I think almost 7 fat ladies after the run this year in Cisco's stock price. How many investors had the fortitude to invest and do nothing as the returns piled up?
There are those on the board that threw $10K or more at Dell (Prince), America Online (Godzilla), Amazon (Godzilla), Qualcomm, Microsoft or Cisco at or near the beginning and have lived to hear some good singing. Okay, QCOM is only up +6280%, but that's not too bad for those who threw a wad of $10K or more in1992 at the Q. Amazon is only up +5750 since 1997. Also not too bad. Can't hold a candle to bazillion % increase in Cisco, 67,578% of AOL or 45,695% of Dell though. How many had the fortitude to invest and do nothing as the returns piled up?
Not to say anything against the excellent athletic recruiting analogy, but I will offer one along the fat lady chain of thought.
If the fat lady as a little girl can't carry a tune and belt out with a clear voice - don't throw your $10K at it. There is enough potential talent that can be seen in the early stages as well as an appetite that will carry the girl to becoming 'fat'. I just got back from attending the pre-school to third grade Christmas/Holiday concert that my pre-schooler and first grader were singing in this morning. Although my kids have inherited their Dad's pipes, I was struck by the voice and look of one of the pre-schoolers in my daughter's group. The girl clearly had a strong, talented voice and was actually leading the group. When she stopped to breath, they all breathed. When she sang loud, they all sang loud. The talent and potential was more than obvious to me, but that's my business. Hey, it didn't hurt that she looked like the type that could easily pack away a hero sub between recess and class either. If I had to throw $10K at the bunch, it would be in her direction first. That doesn't mean she'll end up being thee fat lady, but all the elements were certainly there if it was managed correctly.
That's not how we all pick investments and I'm not trying to say it should be. Although I would love to get in the venture capital arena and throw some wads of money around at what looks like some girls that can really sing. The thread is focused on risk aversion and not being in 'at the beginning' because it is too risky to be giving little girls $10K. Just a joke - no flames please. Remember, those investors who tossed $10K at Intel and did nothing - never ever worried about moving that money elsewhere because too many eggs were in one basket, never worried they had fallen in love with the stock or never got concerns during the huge volatile environment of the market over the years did okay. Same with Cisco, Dell, AOL - regardless that a Prince and a Godzilla are not as 'safe' in terms of investing. What about the returns to date of EMC and JDSU from the original $10K tossed at those?
I would like to see how we all view this 'excercise' ten years from now and what from the book and our experience will change over that time period. I'm pretty sure the authors are open for adjustment and evolution as should we. In fact, the revised manual was a valiant effort to introduce and explain that a lot of money will be made in the Godzilla Game as well going forward. I certainly temper my discussion of pebbles and non gorilla game investments on this thread because I know where I can go to discuss them within a context that doesn't create discomfort.
The few of us that do invest outside of the established Gorillas and Kings discussed on this thread know where to go to discuss those issues. This post was not meant to tick anybody off, but if it does - that is not my intent. My intent is that we will all be a heck of a lot wiser ten years from now after what we are all about to go through. There is as much manic behavior as there is depressive behavior in investing. Yet look what happened to the investors who paid $10K to the little girls and did nothing but held.
BB
P.S. VISX, for those who follow, is in the news today in terms of an IPC decision. |
