Allen, daring to differ, I think your asset allocation model is totally inapplicable to the average investor.
Whereas individuals such as yourself or Jerry, for different reasons, possess the knowledge to dissect a company like WIND and formulate sound opinions, the average investor is not even close. Your confidence in WIND doubling in 3 years is based on exhaustive research and a PhD, or higher, level of understanding of the technology. The probability of you being correct may be, say, 80%.
While I consider myself a diligent investor, I possess neither the technical knowledge nor your investment experience. In other words, I am not embarrassed to say that I am riding your coattails on WIND (by the way, thanks). If you decide to stop posting tomorrow, my source of information will diminish greatly, probably forcing me to sell all or at least reduce my current holdings. Unlike Allen Benn, Ramsey Su's confidence in WIND doubling in 3 years is based on digesting other people's opinion, supported by the basic annual reports and press releases. Now what is the probability of me being correct, probably somewhat less than Allen Benn's.
Let us take it a step further and look at Sue in your analogy. A full time attorney making $500K a year would certainly have no time to be research investment ideas for the meager sum of $50K, approximately 1 month's billing hours. What is the likelihood that Sue would find a company like WIND, and on what basis?
In summary, your model is predicated upon an investor's ability to recognize a WIND, a MSFT ten years ago, or ABC. It is much easier said then done.
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Ramsey |
