Excellent argument, Steve, but even with widespread knowledge of gorilla game theory, wouldn't there be an initial gap-up when the market recognizes that the company in question is indeed a gorilla? Companies aren't born gorillas, after all, they have to grow into their genes...which means that at one moment in time, the company would not be considered a gorilla and would have a "normal" valuation, while at the next, all hell would break loose.
Of course it takes time to recognize this huge hairy beast spinning around in a tornado (most people don't expect to find gorillas spinning around in tornados and assume they must be cows), and it doesn't usually seem to happen except in retrospect -- by analyzing trailing revenues and such. Some people get it sooner; for some, it takes longer. (Sort of like a parent who doesn't recognize their child's become an adult until the child gets married...)
So, scenario one, the company suddenly grows hair, everyone sees it, and the stock price goes up 1000% within the course of a week. (Not likely.) Scenario two, the company grows peach fuzz, a few people notice, then a few more, and it takes from many months to a year or two before the entire market is in agreement. Plenty of room to get in and make a nice profit (if you're one of the early folk).
Nice that we have this board around so we can try to be some of the early folk. :-)
--Tracey |
