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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: techreports who wrote (46063)	9/1/2001 2:36:20 PM
From: Seeker of Truth	Read Replies (1) of 54805

The lesson is not to think that growth rates of free cash flow can long exceed 25%. In fact it is only a very rare company that can sustain such a growth rate for 10 years. The pain of this period is actually worth it if we have been taught such a lesson. Because we will think valuation, valuation, valuation all the time. This gives us courage to go in when the numbers are attractive and courage to get out or avoid when the stock is skyrocketing and all the buzz is that it is still cheap. I don't think diversification by itself is the answer. if we diversify among stocks which are all overpriced, a hot retailer, a fast growing company that insures bad drivers, a tech stock with a new invention, a small drug company with a high return on equity and a price that is out of sight, a toy company with the latest and greatest that your kids want, and which they assure your ALL the kids but them already have,etc. the disaster is also sure. It boils down that we must buy them only when they are cheap by our valuation measures. I think there might be a wide variety of valuation measures that would work much better than no valuation method.

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