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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: hueyone who wrote (46123)9/3/2001 9:20:30 AM
From: Mike Buckley  Read Replies (1) of 54805
 
Huey:

Perhaps some investors mistakenly lowered their guard after reading these four lines

Perhaps they did. Shame on them if that's the case. If they did, it's just another attempt for individual investors to put the blame on someone other than themselves. Did those investors really believe that when a major part of the world went into a recession or a slowing of the economy from 5% to 0.5% as happened in the United States, their Gorilla-Gaming stocks would avoid unnerving volatility?

Any peripheral examination of the stock prices of the most stalwart of Gorillas mentioned in the book gave reason for people to utterly disbelieve that statement about unnerving volatility. And if the readily available anecdotal evidence wasn't enough, perhaps they should have opened their eyes to a different statement by the authors: When the market lowers its expectations of returns and foreshortens the CAP at the same time, it is punishment indeed. Look how much area under the curve is lost! [Referring to Figure 4.18] It is typical for a high-tech company at such a juncture -- even a gorilla -- to lose a third or more of its market capitalization in a single day!

In essence, I simply can't believe a book that says stuff like that caused the bubble of 1999. But as I mentioned, maybe I'm naive.

--Mike Buckley
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