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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Uncle Frank who wrote (36137)12/7/2000 5:19:35 PM
From: Pirah Naman  Read Replies (1) of 54805
 
I don't see a compelling valuation in any of the 10 components of the GKI at this time.

Frank, I don't track all of them. Of those I do track, a couple look to me to be good values based upon my estimates of their intrinsic value. Compelling values - I don't know, I think when I see a compelling value it usually means my estimates of free cash flow growth are optimistic. :-)

There's not a stock in the GKI that couldn't revisit its 52 week low in rapid fashion if market conditions continue to weaken.

But of course. Price is quite often disconnected from value. Over the long haul the two will converge; not that mature companies are priced in line with their value, but that the price will fluctuate about the value line and cross it repeatedly. This is why I think price predictions are of secondary or even tertiary value. The GG, and DCF analyses, are ways of guessing at business performance. When we start trying to predict prices, we are requiring of ourselves that we predict both business performance AND investor reactions to that business performance. Getting the former right is hard enough; it's even harder to predict investor reaction. (Exception: if I buy something it will invariably go down in the short run.)

- Pirah
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