Thomas: ...being a Gorilla is neither necessary nor sufficient for being a good investment.... I don't think anyone ever said it was ...
Really? There's rather a lot of evidence to the contrary. Maybe those were merely the opinions of a few rather vocal individuals whose opinion shouldn't matter?
When you say "That is all we are about on this thread -- distinguishing between bright pebbles, gorillas, kings, and wannabes.", and we agree that this answer is non determinant in the investment decision, then it begs the question "why bother"?
Moore originally provided an answer. Namely that Gorillas were undervalued by the market and, from this, a profitable investment strategy with above average expected returns was suggested. He called this strategy "The Gorilla Game" and wrote a whole book about it, as you know. We have witnessed this as intellectually appealing in theory but rather rudely inadequate in practice.
So when we take away Moore's answer, the question leaves a hollow echo. If identification of Gorillas does not serve to satisfy Moore's purpose, then what other purpose does it serve? And more importantly, why is that other purpose important?
Your prima-facia answer is that "knowing that a company is or is not a gorilla with respect to its market does tell you something very important about what kind of control the company has in that market". To which the question "why, what good does that knowledge do me"? is the next in a logical series of questions.
Companies with very little control in their market can be under-priced, and companies with total control of their market can have their stock price cut in half and then in half again and drop from there. So obviously control by the company on its market has very little bearing on the quality of the company as an investment.
But here we find an investment related thread in which this aspect of companies is discussed in the same paragraph as the word "portfolio", and where folks have an active anticipation of coming out the other side better off and wealthier for the effort. You would think therefore that it has bearing on something related to investment.
What is this something, and why is this something worth spending time and effort to determine?
I am quite serious in this question.
John |
