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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Eric Jacobson who wrote (31647)9/14/2000 8:02:26 PM
From: Mike Buckley  Read Replies (1) of 54805
 
Eric,

However, the point I was trying to make is the investment decision should be made on the company's GG criteria, not its profitability status. This is a straightforward concept - a company's profitability status should not be used as a surrogate to measure its G&K status.

You're absolutely right, of course.

Not to speak for Frank, but I gathered that he was focusing on profitability as a symptom of safety. The stocks of companies whose products are soon entering or are already in or beyond the hypergrowth phase of their adoption are safer. Much if not all of that translates to a profitable bottom line.

As the authors write on page 15 of TRFM, "it is very hard for any company to lose money in a hypergrowth market." That being said (and I agree with it), this investor sees the P&L statements of the dot-com companies and others that are losing money during hypergrowth as a huge red flag being waved in the air.

--Mike Buckley
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