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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Uncle Frank who wrote (40204)3/10/2001 5:43:39 PM
From: Thomas Mercer-Hursh  Read Replies (1) of 54805
 
His approach is to locate entry points in great companies based on valuation, and then hold on for the long term, but keep in mind that his model doesn't include tech. My approach is to locate entry points in great companies based on the position of its products in the talc and then hang on for the long term.

It seems to me that this is an absolutely key distinction which is often over-looked or blurred over by GG-bashers. Because Buffett deals with old economy companies, there is no reason to expect them to undergo dramatic, phenomenal growth or for them to dominate a sector other by long term plodding. The reasons that these companies succeed is not because they make a product which no one else can make, but because they make it cheaper or better, their marketing is better, and/or just because good management provides consistent and appropriate direction.

In tech, however, we have a significant number of companies that grow at absolutely phenomenal rates and frequently rise to dominate a sector in amazingly short periods of time. This happens exactly because of the product. Of course, one still needs the sales and marketing and management and, particularly the value chain building but the product has a significance in these companies which is entirely different the the product distinctions in old economy companies.
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