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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: rel4490 who wrote (7342)	10/2/1999 11:45:00 AM
From: Mike Buckley	Read Replies (1) \| Respond to of 54805

Perhaps this means that it is prudent to modify GG investment theory by taking a more aggressive stock position when the market is waiting for a Defining Event( Q pre 4/1999; Gemstar pre settlement) and take no stock position when the market has already assumed the crossing before it has happened ( Rambus). Hmmm. Even for this dyed-in-the-wool avoider of market timing, that strategy seems awfully appealing. I think the reason it appeals to me is because "value" is at the root of the theory. It takes a path that hints of an undervalued or overvalued stock by pointing out the inefficiencies of the market. --Mike Buckley

To: rel4490 who wrote (7342)	10/2/1999 3:15:00 PM
From: Apollo	Read Replies (1) \| Respond to of 54805

Rel: I think your comments are very relevant. sTan Perhaps this means that it is prudent to modify GG investment theory by taking a more aggressive stock position when the market is waiting for a Defining Event( Q pre 4/1999; Gemstar pre settlement) and take no stock position when the market has already assumed the crossing before it has happened.

To: rel4490 who wrote (7342)	10/3/1999 12:47:00 AM
From: tekboy	Read Replies (1) \| Respond to of 54805

<<re: perceptual GG. I think that you have stumbled onto a very important investment corollary to GG analysis.>> Thanks. The original GG combined technology and the product adoption cycle with stock market knowledge. I see this type of discussion as adding in behavioral economics. I'm curious if others agree that it's worthwhile, however, because I don't want to waste thread space if these posts strike people as tedious, off-topic, or ill-informed. <<It takes both a fundamental crossing of the chasm and a perceptual crossing by the market for the stock to react.... Perhaps this means that it is prudent to modify GG investment theory by taking a more aggressive stock position when the market is waiting for a Defining Event (Q pre 4/1999; Gemstar pre settlement) and take no stock position when the market has already assumed the crossing before it has happened (Rambus).>> Bingo! That's exactly the kind of analysis I was groping towards, and precisely the practical conclusions I draw. One other factor might enter in, however, which is the ability of a company to build a strong popular following. This is my chief worry about CTXS, based both on the complexity of the market involved and the company's poor PR efforts. In that context, the following excerpt from Burton Malkiel's "Random Walk Down Wall Street" is instructive. For those who insist on trying to beat the indexes, he offers four rules. The first is, "Confine stock purchases to companies that appear able to sustain above-average earnings growth for at least five years." The second is, "Never pay more for a stock than can reasonably be justified by a firm foundation of value." The fourth is, "Trade as little as possible." For our purposes, the third rule is worth quoting with its full discussion: "IT HELPS TO BUY STOCKS WITH THE KINDS OF STORIES OF ANTICIPATED GROWTH ON WHICH INVESTORS CAN BUILD CASTLES IN THE AIR. I stressed...the importance of psychological elements in stock price determination. Individual and institutional investors are not computers that calculate warranted price-earnings multiples and then print out buy and sell decisions. They are emotional human beings--driven by greed, gambling instinct, hope, and fear in their stock-market decisions. This is why successful investing demands both intellectual and psychological acuteness. "Of course, the market is not totally subjective either; if a positive growth rate appears to be established, the stock is almost certain to develop some type of following. But stocks are like people--some have more attractive personalities than others, and the improvement in a stock's multiple may be smaller and slower to be realized if its story never catches on. The key to success is being where other investors will be, several months before they get there. So my advice is to ask yourself whether the story about your stock is one that is likely to catch the fancy of the crowd. Is it a story from which contagious dreams can be generated? Is it a story on which investors can build castles in the air--but castles in the air that really rest on a firm foundation?" I think that last sentence is sheer genius, and a great description of MSFT, INTC, and CSCO, along with QCOM and GMST, as well as, say, JDSU and possibly even ICGE (the King and Significant Other in Teflon's three-way game). I'm not sure, however, that it holds for all our arcane techie faves... tekboy

To: rel4490 who wrote (7342)	10/3/1999 6:30:00 PM
From: Percival 917	Respond to of 54805

re14490, Excellent response to tekboy's post. I have been out of town and am catching up. You have put forth a VERY interesting idea of the fundamental crossing versus the percived crossing. Your examples appear to back the statement very nicely. Look forward for further expounding on this theme from the thread, Squire J

To: rel4490 who wrote (7342)	10/3/1999 7:31:00 PM
From: Eric L	Read Replies (2) \| Respond to of 54805

rel4490, << I think that you have stumbled onto a very important investment corollary to GG analysis. It takes both a fundamental crossing of the chasm and a perceptual crossing by the market for the stock to react. The two crossings probably never occur at the same time. Merlin believes that the fundamental crossing for the Q took place a full year before the perceptual crossing. The market required a Defining Event (the litigation settlement) before reacting >> Your important investment corollary I thought was worth repeating in its entirety, after Joel just called it to my attention again. Merlin noted substantial increases in the cdma subscriber base in March 1998. There was another signal, early in 1998 (January) that cdma had possibly crossed the chasm, or soon would be doing so, and this was when W-CDMA was offered to the International Telecommunication Union by GSM proponents as their proposed third generation standard, acknowledging the technical superiority of CDMA as an air interface. << Perhaps this means that it is prudent to modify GG investment theory by taking a more aggressive stock position when the market is waiting for a Defining Event ... Gemstar. Interesting thought. I was lucky to have done this with Q. The stock ran up quite a bit in the quarter preceeding the Defining Event, then took off like a rocket. Could happen with Gemstar. - Eric -