refer to the great "uncle frank"....qcom 2000 in 2000...and people followed this logic....ask jill how she got into trouble....by keeping the ltb+h mindset and used a parabolic gain to leverage...the strategies used together can be fatal....
Ed, I'm sorry, but I neglected to comment on this statement, and feel compelled to do so. At the risk of sounding obsequious, perhaps you know a different UF than I do, but to me he has been one of the most level-headed individuals on SI. I have never heard him say qcom 2000 in 2000, nor have I seen him be dogmatic about any trading strategy, not even G&K. If anything, he gave me the opposite point of view when I became too enamoured of companies like cree, questioned whether any of us would ever have another year as good as 99 for G&Ks (to my disagreement), counseled me about the risks of too much trading, introduced me to leaps, explained to me the merits of ltb&h of quality stocks, and on and on. There may be some that post on G&K, or other threads, who might fit your description, but UF is the last one I would describe the way you did.
And about G&K itself, I said I am not its best defender, and I am not. Frankly, I am not that knowledgeable about its many nuances. However, after reading the book years ago, before I ever heard of the G&K thread, I obtained new insights into the technology adoption cycle. The G&K thread gave me practical lessons in how that is applied to individual stocks, and out of the many ideas in that thread I picked qcom, jdsu, and cree, all of which were monster winners for me over the last 12 months. I can't argue with success. Will that repeat in 00? I doubt it, and I now agree with what UF said to me several months ago, that I should not expect that in the future. I don't think the problem is the G&K model itself, but that it has become a victim of its own success, as have many technology areas. The multiples got too rich, the caps too large, and no company can continue that phenomenal growth ad infinitum. So what was a great G&K investment at a p/e of 30, 40, or 50, may be a bad investment at over 100. In a sane market, these companies would have grown at more moderate paces, and may never have reached such multiples.
I suspect that we are in violent agreement in much of this, though not all, particularly with respect to UF. I guess we will just have to agree to disagree on that point. |
