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Strategies & Market Trends : Gorilla Game Investing in the eWorld -- Ignore unavailable to you. Want to Upgrade?

To: Mike Buckley who wrote (805)	11/21/1999 5:23:00 PM
From: Jill	Read Replies (1) \| Respond to of 1817

Mike, That was a very generous long instructive post to Poet. I first got into trying to understand stocks at the Fool. I printed out their various lessons and tried to understand them. Unfortunately for them or for me, a few of the stocks they recommended in their DRIP did poorly for me (Coke and Exxon) and this annoyed me. I understood the intent of the PEG, but as you point out they can't be used in a vaccum. In fact, much of the time I wonder how often they really are used! I began to come roudn to the idea that edamo talked about a long time ago on the DELL thread, when DELL only met estimates. He'd say, "Mikey needs to change the perception of this company." Perception was about intention and future domain. IBM at that time temporarily "grabbed" the idea of ecommerce for themselves and their stock shot up. It was about Gerstner manipulating perception (now if you can't follow through...sooner or later you'll get punished.)I began to feel that stories were the engine of stocks, and there was so much information, so many stories around today, particularly on CNBC which I almost never watch. So I wanted to know what the real story was behind a company. Internet years are hummingbird years if not gnat years. Things move so fast. As you pointed out, traditional gorillas will soon be b2b and it'll all be hard to distinguish. I found real stories on SI because these boards often have intelligent longtime investors, many who are in the industry. To get round to ITWO again--it seems to me the story on the ARBA thread is worth listening to. Not necessarily investing in today or tomorrow, but watching closely. One of the things that DOES confuse me is the debate in that basket about switching costs. Sometimes I wonder if it matters--nobody switches from INTEL to AMD because INTEL cornered the market. Looks like Qualcomm is doing the same w/ CDMA. But in this arena I don't honestly have enough inside savvy to know whether that debate is meaningful. 'Nuff said. I'd probably be a wiser investor if I was a FOOL, but... Jill

To: Mike Buckley who wrote (805)	11/22/1999 3:13:00 AM
From: James F. Hopkins	Read Replies (1) \| Respond to of 1817

Mike ; RE thanks for putting up with my inability to understand why so many investors are willing to buy stocks these days without a clue as to what today's fair value might be. They don't buy apples, cars or homes that way, but they sure do buy stocks that way. The most interesting aspect of the above statement , is that it explains why Fundamental Analysis don't work, any model you can come up with be it the "Fool Ratio" or what ever is defeated by "hype" , or out and out manipulation of stock prices via the coordinated cooperation of several fund managers who get together to pump and or dump a stock. Valuation based on most SEC filings which even the head of the SEC is saying are now little more than smoke and mirrors as companies find ways to get around and through so many loop holes a person can't tell the loops from the holes. The market is to crooked for any model to work, being able to spot Mo Mo ( momentum ) is where it's at as all we have is a Mo Mo market. Jim

To: Mike Buckley who wrote (805)	11/23/1999 3:47:00 AM
From: Bruce Brown	Read Replies (1) \| Respond to of 1817

Thanks for sharing the Small-Cap tools that you use Mike. I wanted to talk a little bit about small-cap/large-cap stocks since the discussion has come up. Not in terms of PEG's or other valuation tools, but in terms of cyclical valuation that the market decides to give to the small and large companies. The last 'hot' period for small-caps was the end of '89 to '93. I had a couple of small-cap mutual funds that really outperformed. Certainly, we have plenty of patient investors waiting for that cycle to come into 'favor' again. The small-caps really haven't been such dismal performers (doubled in the past five years which is certainly acceptable). It's just that the S&P 500 market leaders have done so darn well. Many have been very surprised by the strong double-digit earnings gains for large companies even though we are already nine years into an upward economic cycle. Thank you technology! All the data that I have read points out that the average large-cap company over the last several quarters has seen earnings year over year growth in the 12 - 15 percent range. That's significant and only points out the average large-cap company. Many others are showing record profit margins and astounding strong growth for this point in the cycle. During this same time period and economic cycle, the data shows that the average small-cap company has experienced deceleration in earnings growth. Small-cap average growth over the last several quarters has been 5 - 7 percent while the large-cap average has been 12 - 15 percent. In past history, small-cap earnings have done well when the economy is strong. However, this time the case is appearing to be different. Once again, these are all for the average stock, but I think it points out a particularly strong case for why the 'market' has decided to reward the 'average' large-cap with valuations that have rewarded investors more than what the valuations of the 'average' small-cap have done during this period. Earnings growth drives the valuations and if the trend continues for the large-caps, then we will see the continued reflection in the valuations going forward. BB