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

To: om3 who wrote (16894)	2/1/2000 9:56:00 AM
From: John Stichnoth	Respond to of 54805

Re efficient markets--I think you and Mike have already reached agreement on this, but to add a point: The markets cannot be efficient. There are too many things going on that prevent "rational" buys and sells from all participants all the time. Look at Gregg Powers last year. He was forced to divest a portion of his holdings last year, as QCOM made its run, because the Q had become too large a portion of his fund's holdings. Powers was forced into an irrational sell by legal concerns, not by consideration of risk/reward of the Q. Most of the market (i.e., the fund managers) are forced into a much shorter time horizon than GGers. They've got to look at their quarter-to-quarter returns, and at 1- 3- and 5-year returns. Rarely do they worry about a 10-year outlook. (How many managers expect to be running the same fund for 10 years?) Edit--By PM it has been pointed out that Powers is an Asset Manager, not a fund manager. Also, exception was taken to my use on not rational term. I mean not rational in terms of purely risk/reward issues. Of course, in the larger context his sells were perfectly appropriate and rational.

To: om3 who wrote (16894)	2/1/2000 10:02:00 AM
From: Mike Buckley	Respond to of 54805

Steve, It does seem that for that to happen, though, the company must continually surprise the market and force continual upward re-evaluation. I guess the ability to continually do that is what makes gorillas special! Exactly! And that brings us full circle, explaining in part why I don't think the market will ever consistently efficiently price gorillas. It's so difficult to know the economic value of the gorilla's value chain. There will always be upside surprises that say, "Mr. Market, there really was no way for you to have any idea what we, the members of the value chain, were really worth to your gorilla." Great discussion! --Mike Buckley