There are three factors which determine the price of any stock:
(a) time value of money
(b) estimated future profits
(c) future-risk
Not to mention (d) what the market happens to think of it at the moment. I don't say this to be flip, but to point out that there are frequently very significant disconnects between what the price *should* be and what it actually is and that these disconnects can persist over medium long terms.
And before a Gorilla is identifiable amongst the other shiny pebbles, it is hard to argue that it deserves anything but Vanilla valuation
I suppose this depends on what you include within Vanilla. To me, a shiny pebble ... assuming we are talking here of a company for which serious gorilla potential can be argued, not just some story stock ... is different from ordinary stocks in much the same way as a gorilla, but differs from the gorilla in the level of risk. This *could* mean that using Vanilla valuation (VV?) would be advised, but I don't think it is an accurate reflection of the company. Think of the projection on which the valuation is based as being a pair of diverging lines representing the upper and lower confidence bonds of our projection. The shiny pebble still has a central tendency like that of a gorilla, but the bands diverge much more rapidly. This is particularly significant in relationship to the "basket" approach in which one may have a relatively high level of confidence that one of the group will attain gorillahood, just not which one among the basket.
It is not as valuable in advance as we might want it to be. Or more to the point as it needs to be in order to be successful.
Based on? A gorilla that has entered into tornado still has a huge amount of growth ahead of it. Moreover, I think the consensus here is still that investing in silverbacks is perfectly reasonable (outside of superbubbles, at least), just not as wildly rewarding as catching the wave early.
Can we identify Gorillas early enough? So far, this thread hasn't had too spectacular a track record. Individuals perhaps. But the thread as a collective has not.
How has it been unsuccessful? What companies on which we had a consensus of gorillahood has it proven not to be the case? What gorillas did we examine and inappropriately dismiss. FWIW, I don't think that we need to count only absolute hits and misses here since having a mixed consensus in the thread can well be indicative of a company that is not a pure case or one whose market has yet to fully resolve. I would actually reverse your judgments -- some individuals have made significant mistakes, but the thread as a whole has shown good understanding. Note that the composition of the GKI is formed by open voting, not by consensus, so it can be expected to include companies which a subset of people think is a gorilla, but where thread consensus either disagrees or at least thinks it is premature.
What I am saying is that when repeated often enough and by enough people, the practice of Gorilla Gaming should attract enough spectacular failures so that in the end one's net returns turn out to be average!!!
Any given theory can be wrongly or poorly applied. That doesn't make the theory wrong or poor.
And Moore's book has been out for a few years now. It's not exactly a secret.
True, but as we have discussed here before, it seems unlikely that any intrinsically long term strategy will ever become broadly popular in this world of instant gratification. |
