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

To: baliorbust who wrote (16503)	1/25/2000 11:26:00 PM
From: DownSouth	Respond to of 54805

Your questions are good ones, but the answers depend on your style. And your style is something that takes time to develop. I will tell you that I have both of my young adult children's Roth IRAs 100% in QCOM. I have my parents small brokerage account 100% in GMST. I figure GMST will be less volatile, which suits their psyche, but will be a steady climber so that they will see great returns this year. My kids could care less about volatility. They won't even see their portfolios again for another 6-12 months. They will like the results and I don't have to worry about managing their funds. Its done.

To: baliorbust who wrote (16503)	1/25/2000 11:34:00 PM
From: Mike Buckley	Respond to of 54805

baliorbust, Now that you're taking a more direct role in "responsibility for the quality of the thread," I'm compelled to answer your question. :) How about diversifying over several markets by investing in gorillas? Does this lower one's risk, specifically to being affected by discontinuous innovation? I think so. Should that be a concern for the GG investor? I think so. I'm not suggesting that anyone agrees with me about that, but I do think it's an important point at each GG investor has decide upon for him/herself. --Mike Buckley

To: baliorbust who wrote (16503)	1/26/2000 1:12:00 AM
From: mauser96	Respond to of 54805

There is no consensus answer about diversification. Some feel safe with one stock, most prefer more. At it's heart the GG is really one of concentration, not diversification. Carry diversification to it's end and you have an index fund. Furthermore, there are only a limited number of companies that meet the criteria of gorilla or powerful king, and it's too difficult and time consuming to follow and understand lots of companies. Most academic studies show that the bulk of theoretical diversification can be obtained with 10 stocks, and that's the maximum number I will own, and I'm a full timer. Most of the gg crowd have somewhere between 3 to 10 stocks, not necessarily weighted the same. Own whatever number you feel comfortable with and can follow carefully. If you follow the basket approach or the Russian Army tactic this will gradually reduce the number of holdings unless you add new ones.

To: baliorbust who wrote (16503)	1/26/2000 5:44:00 AM
From: Uncle Frank	Respond to of 54805

>> if you were a young investor with limited funds, would you consider other "gorilla" stocks or just stick it all in QCOM? Welcome, Bali Bound. My son funded his first Roth IRA this month, and elected to go with a mix of gmst, ntap, and qcom. In this grouping Qualcomm is the old timer and I'd expect the two Gorillalets to outperform him in '00. As a young person with an "infinite" investment window, I'd recommend you lean towards volatility and experiment with multiple stocks before you marry one. uf

To: baliorbust who wrote (16503)	1/26/2000 10:08:00 AM
From: tekboy	Read Replies (2) \| Respond to of 54805

Hey Bail, on the whole diversification issue, there never has been, nor will be I imagine, any consensus around here. Basically I see five separate views, all of which are held by some here. The first, and ironically least popular, is the canonical winnow-the-basket-into-the-gorilla view set forth in the manual. Few here follow that, and the manual itself doesn't really say much (other than a few vague obiter dicta) about portfolio management in general among gorillas themselves. Second, also not especially popular here, is the "let a hundred flowers bloom" approach, of which BB is the best example. Lots of small positions in lots of promising things. Third would be the LindyBill "Russian Army" approach, which involves selling off losers and concentrating into winners (sort of like treating the entire portfolio as a basket), and then ultimately staying hugely concentrated in the best play you can find (appropriate for one's own goals, risk tolerance, etc.). Fourth would be the "Modified LindyBill" approach, which basically starts with the previous one but then diversifies out into other companies after the Fat Lady has sung--i.e., after one has reached some obscene personal goal and begins to worry about capital preservation as well as wealth creation. Franq is doing this now, and Lindy is talking about doing it. Fifth and finally, and I believe most popular, is the basic Lynch-Buffett view of assembling a fine portfolio consisting of a handful of gorillas, and perhaps some kings and gorilla-candidates. Thus many of us have, oh, half a dozen different holdings, all tech but diversified by sector, ranging from a few percent up to half or more of the portfolio (that depends partly on recent performance!). Anyway, this is one of those perennial questions that is never going to be settled, not least because there is no single right answer--it depends on one's own comfort level, boredom level, knowledge base, goals, etc. etc. Since it's been covered a lot in the past, if you "read the archives" you'll encounter diverse views of diversification... :0) later, tekboy@thankgod"fjord-man"ishappy.com