Let's take a little gander at a 15 year chart which includes three Kings - 2 current (EMC & JDSU) and 1 former (Compaq) - as well as the usual gorillas:
siliconinvestor.com
Obviously, not owning Cisco and or Microsoft would have been a sad thing for technology investors. However, take a look at Mr. King who lost his crown, throne and castle (Compaq) and faced 'commoditization' as well as attacks from the Princes. Not exactly the kind of investment return to be sour grapes about for investors in the late 1980's and to warrant the mighty statement 'hold them Kings lightly'. However, I would caution that the value chain of the PC technology adoption life cycle has been one of the strongest, most important value chains to date. Therefore, the royalty members of this value chain that were market leaders may be exceptional when comparing performance to value chains of other technology adoption life cycles. I won't argue about the obvious choices of being in the gorillas, but I won't blindly take the statement by the books author's of 'hold Kings lightly' either - especially in light of the technology adoption life cycles that EMC and JDSU are participating. If you haven't already, take a run over to Robbie Stevens next generation/broadband technology adoption life cycle slide show and presentation:
nextgenerationnetworks.com
Click on the word "Presentation" on the right and follow through the slide show.
Here's a chart over the same 15 year stretch that has some gorillas, a godzilla, a Prince, Compaq, a 'mutual fund' in the form of GE and IBM tossed in just for fun:
siliconinvestor.com
In this case, not owning AOL, Dell, Microsoft and Cisco would have been a sad investor dilemma. Cisco has been thee 'investment' to own and obviously remains one of thee investments to own.
Even if non gorilla stocks failed to execute or gave warning signs to encourage one to let go - an investor who held on past those points, through the carnage has not done bad at all. Buying shares of Compaq in 1987 alongside the enabling technology companies of Microsoft and Intel rewarded the investor with nearly a 10,000 % return - and that's for a stock that should be held lightly. It smoked the returns of the same period for Wal-Mart, Pfizer, Citibank, JP Morgan, General Electric and Coke just to name a few 'famous' stocks outside of the gorilla game that investors know about. I tossed in the famous American motorcycle growth company of Harley Davidson to show how close it came to matching the return of Compaq over the same time frame:
siliconinvestor.com
I simply make these points (the chart speaks much better than I) for all those that follow this thread. We're talking about a book that deserves to be debated. We've only got two, excellent long term performers (MSFT and CSCO) and really only Cisco wins the whole ball of wax. On a shorter term time frame using the decade of the 90's, Godzilla AOL and Prince Dell would have given a more concentrated return outside of only - Cisco. You could cut those two in half or even a third and the returns would still be spectacular for non gorilla investments by any measure.
We can certainly chat about the risk aversion of being only in the enabling technology companies that have created a value chain. When a technology adoption life cycle that comes along like next generation networks that might not produce a gorilla, but a strong King instead - I consider it a worthy investment. I guess it all comes down to entry points, goals, horizons and what technology adoption life cycle the King happens to be a part. JDSU is in the earlier portion of their cycle and EMC, thanks to the Internet, is not hurting for business any time soon.
No need to send me back to the manual. I just think we should question certain things presented and not be paranoid of investing in a King.
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