Wind River going up, up, up! Message Board

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Technology Stocks : Wind River going up, up, up!

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To: Ramsey Su who wrote (1688)	8/13/1997 11:31:00 AM
From: Allen Benn	of 10309

Ramsey, always dare to differ. Actually, I don't think we differ as much as you seem to think - except for the esteem you seem to hold for a PhD's special investment insight. I advise you and anyone reading following this thread to watch carefully and pay attention to the likes of Dave Lehenky, mac or many others when they relate their first hand technical experiences. The sum total of these contributions are what make this thread valuable, not my occasional visionary ranting. The reason I don't think we differ half as much as you suggest, is that concentration is related to confidence in future company performance. If the average investor cannot distinguish between stocks with confidence, then the model I presented will substantially reduce the investor's concentration in each individual stock, ultimately to the point of complete diversification. At this point, traditional asset allocation models are best equipped to fiddle around with attempts to reduce volatility. Recall that Phil Fisher and Warren Buffett often say that diversification is a sign of ignorance. We not only now understand why this is true, but we can calibrate it. If your concern is that the average investor doesn't have the foggiest idea about the shape of the function that best describes his utility for money, nor even that he has one, or what he might do with it if it was delivered to him, then of course the answer is this can all be bottled up and made presentable. While the case studies were mostly fictional, Sam is real - except for two things: (1) he didn't know his utility function is logarithmic and (2) he didn't mark down his WIND weighting to only 60%. (And of course his name isn't Sam.) Allen

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