RE: Past returns
Now Bruce, you don't really think performance going back 20 or 60 months for CREE is relevant do you?
Let me tell you how my post came about. Somebody challenged me that gorilla game investing was 'wrong-headed' on another message board. They also challenged me that it was impossible to make any money in the stock market between 1960 and 1980 because the broader indices were horrible. I couldn't let such a challenge like that go without contesting it. Another poster wanted to know how many stocks to hold.
Hence, I launched into a few lengthy posts on said subject and checked the returns for 31 stocks (26 from the G&K as well as the W&W index and 5 Godzillas) in the 20 month, 40 month and 60 month time frames as well as historical returns for Silverbacks Intel (14,115%), Cisco (162,270%), Microsoft (52,232 %) and Oracle (46,499%) since 1980 - the official beginning of the PC technology adoption life cycle according to Paul Johnson. I also randomly chose a few stocks that would have been well known around 1960 that I'm sure brokers worth their salt were recommending. Nothing unusual, just well known companies that any broker was aware of and was 'selling and churning'. Coke, GM, General Electric and Disney. Then I showed the returns and dividends for the 1960 to 1980 periods of these particular companies to show that holding a couple of them would have not been such a sour experience as the indices show for that time frame. I didn't go the extra step to compare the difference of what that money in an interest account or in real estate would have been for the same time frame, but my point was made that regardless of what the broader index is doing or the economic cycle is - it is always about choosing investments.
I'm not sure my previous post about the top six performers from our indexes over three randomly chosen periods was any attempt to show any kind of relevance. Since I had taken the trouble to assemble the data for my post which addressed the 'wrong-headed' thought of gorilla gaming, I thought it would be interesting to present the top 6 performers from our G&K and W&W index list. I was simply doing an exercise of what the market has been 'saying' and would be the first to agree that what has happened in the past holds no key to the future. Or does it? (Unless of course one had a Michael Jordan in his prime surrounded by an excellent team!)
However, since you brought it up - I am a big proponent of LTB&H investing. Not for the sake of buying and holding forever, but for the sake of trying to understand once I have chosen an excellent investment - especially a gorilla or candidates in the tornado - what kind of growth rates, CAP/GAP they hold and what the outlook is historically for holding said investment through various economic cycles. I do this for various historical periods and for various types of investments for my own study. Gorilla Gaming is, historically a shorter time period to study. However, looking back to 1980 and the PC technology adoption life cycle as well as back to 1990 and the enterprise networking technology adoption life cycle provides enough 'data' to make a few relevant assumptions for me based on the bull market study period. Then I factor in the consequences of 'trading' one investment for another that might be of interest to me if the growth rate is 'more attractive' using the applicable tax rates (since the majority of my holdings are in taxable accounts) to the consequences of holding the current investments with a particular growth rate and projected growth rate and how it might affect my returns going forward. There are no concrete conclusions or predictions that can be drawn because we don't know the future. Yet, if a technology has a huge target market rather than a smaller one, even if they are both gorilla candidates or confirmed gorillas I want to know that and see how other similar investments have performed in the past.
All I have to base this on is past historical performance returns of various investments in various types of markets with various types of growth rates. How does this apply to Gorilla Gaming? Obviously, we cannot compare and contrast every tornado phase of every technology adoption life cycle as being equal because the target market and longevity for each are different - not to mention management's performance in the various stages of the cycle. In other words, a gorilla is not a gorilla is not a gorilla is not a gorilla. There happens to be a plethora of investment options available for gorilla gamers as we are standing in the middle of quite a few technology adoption life cycles - not to mention crossroads.
If you take the top six from the 60 month period and extend that out to 100 months using the same six stocks rather than the top six for that period, the results are just as different as they were for the 40 or 20 month time frame periods.
siliconinvestor.com
JDSU - 38,006%
CSCO - 19148%
QCOM - 8118%
CREE - 6822%
SUNW - 5799%
NTAP - 3822%
The shorter time frame of 10 months (for the same six stocks) is probably more relevant if one wants to focus attention on the discussion period of when CREE began serious discussion on this thread and how it might of had created demand or price action in the stock:
siliconinvestor.com
CREE - 765%
JDSU - 567%
NTAP - 490%
QCOM - 409%
SUNW - 205%
CSCO - 129%
In fact, this period covers serious discussion on four very important favorites on this thread - NTAP, JDSU, CREE and QCOM. All of which seem to have caught the attention of investment money. Yet, if one goes back to time frames that precede recent discussion, these stocks all received the attention of prior investment money. However, in terms of investing, a ten month time frame is too short to draw any reasonable conclusions outside of things like momentum. The fact that CREE is closing in on 'double' the performance of Qualcomm over the past ten months may or may not be interesting. I'm not drawing conclusions - just listing the information.
One conclusion I have drawn - we have a lot to be thankful for as investors from the previous years performance. I've got plenty of years ahead of me and based on the past and outlook for the future - I think I will have a lot to be thankful for one year, three years, five years, ten years, twenty years and forty years from now.
Not that any of this is relevant...
BB |
