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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: npiwovar who wrote (35759)11/30/2000 8:58:56 PM
From: Uncle Frank  Read Replies (3) of 54805
 
>> when we see such a downturn in stock prices like we're seeing now it again brings up the question of keeping cash in reserve for "bargains".

Neil, the concept of keeping a cash reserve has become a reoccurring theme, and I have no problem with it. It's an issue of portfolio management rather than Gorilla Gaming. Merlin is the most devout GGer I know, but he has noted numerous times that he has 7 years of cash reserve, which allows him to feel at ease during down times like we are experiencing. In essence, you could consider cash as a no-risk investment (money market) that reduces the beta of your overall portfolio and limits the volatility you might experience to levels you find tolerable.

That being said, the strategy of maintaining a cash position to be used for bargains is a much different concept. It presumes you can identify a bargain (bottom) and profit from it, which is the cherished belief of all market timers. NTAP looked like a bargain last Friday at 62 7/8, but if you had bet your cash on it, you'd find yourself 21.5% underwater tonight, negating 4 years of money market returns in mere 4 days. And there is no reason to presume ntap won't continue to retrace during this correction.

As I said a few weeks ago, I have profound empathy for the GG Class of 2000. Mr. Market has given you precious little in the way of positive feedback (returns) to support your new beliefs. I'm afraid all you can do at the moment is use intellectual reasoning and anecdotal evidence from longer term hunters to support your decision to Gorilla Game.

uf
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