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

To: tekboy who wrote (17922)	2/14/2000 1:36:00 AM
From: tekboy	Read Replies (1) \| Respond to of 54805

I realize it may be out of place on the "New Cree" thread, but this post from the rich janitor is worth a glance from any who didn't see it over on "coming into range"... Message 12855898 tekboy/Ares@Q?what'sthat?.com

To: tekboy who wrote (17922)	2/14/2000 1:19:00 PM
From: SL2	Read Replies (2) \| Respond to of 54805

tekboy, << Overindulgence in margin is very dangerous...>> I have read and enjoyed many of your posts. Let me clarify a few important points. 1. The main thrust of my post was using CSCO as a bench mark or "higher standard" which I can evaluate all other potential purchases. 2. I'm new to G&K thread but not SI. I read "Crossing the Chasm", "Inside The Tornado" and Original "Gorilla Game" years ago and I've been in the technology industry for 15 plus years. What attracted me to the G&K thread was that the philosophy espoused is very similar to what I have already been practicing. In addition, the quality of the people/posts on this thread are terrific. Absolutely the best I've experienced to date. 3.Overindulgence in margin, for that matter most things in life, is not a sound practice.I couldn't agree with you more. The problem with trying to keep posts to the point is that sometimes we leave out key distinctions, in the interest of brevity, that add important or essential context to a particular strategy. 4.In the case of buying CSCO on margin after a major overall market correction, let me add some additional distinctions for clarity. a. Anyone uncomfortable w/the use of margin at all should just pass, but my points about CSCO are still valid.I'm not suggesting anyone should ever use margin. For me its a strategic weapon and I use it responsibly. I have very specific rules for when and how I use it. B. I said "...if there is a significant market correction and all technology stocks get pounded, I usually use margin and load up on a good bit of CSCO". I should have added the following: 1.When I do add more shares of CSCO on margin, I have no existing margin debt and a substantial base of assets, many times larger, than the short-term margin loan I choose to use. 2.In addition,as a sort of extra "belt and suspenders" back-up system, I keep additional stock in a different account which gives me the flexibility to transfer that stock or cash from the available loan facility should I ever be forced to "cover". I've never had to use the back-up system, or received a margin call" because I don't come close to pushing the edge of the envelope (i.e. using the total margin available to me) with my margin buys. I'm talking about using 10-15% of available margin tops (that does not does not count my back-up system)and only when asset prices appear to be on sale. I also don't try to catch the exact bottom, I'm looking for a reverse in trend, so I might use a "stop buy" order. When the prices recover, I take my profits,bring down margin debt to zero and buy additional shares of my favorite growth prospects. If the market does not allow me to play by my rules, I don't play that round. 3. In essence, I occasionally use margin much like a very well run enterprise might use debt to increase its ROE above its ROA. Its a strategic tool and can build great wealth if used responsibly and with discipline. 4. Another key point I was trying to articulate is that when I do use margin, I'm purchasing what I consider to be the very best quality merchandise available (e.g. CSCO) at beaten down prices.If I have to hold it a bit longer than I anticipated, I can stay relaxed because I've selected the best. I'm trying to exploit the greed and fear in the market place. 5. Your point about "forced selling" is a very good one. That is precisely why I only use small portion of the loan facility available to me and why I have assets and a draw down facility in a separate account. I still agree that with all this there are still risks involved and each individual must examine his/her tolerance for risk. SL2

To: tekboy who wrote (17922)	2/14/2000 5:57:00 PM
From: Jill	Respond to of 54805

Tekhoney, somebody alerted me to your post. Yeah, we be on the wrong side of the tracks, living it up, and when we wanna get rea--a--llly bad we go over to the next town to Voltaire's porch where the wisteria are mysteria. 'Course you know your own pokey stick in the mud uncle built that place with his own long term buy and hold hands. (Actually, legend has it he simply laid the foundation, and depydog actually built it with her own hands) Jill