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

To: Mike Buckley who wrote (22929)	4/18/2000 7:13:00 AM
From: Tom Trader	Read Replies (1) \| Respond to of 54805

My recommendation is that you continue to be more direct using your polite, kind, gentle approach that is so effective Now an invitation such as that is asking for trouble!:) So here goes: I believe that you have previously stated that valuation does matter when it comes to buying a gorilla. In other words it presumably does not make sense to buy a gorilla at any price irrespective of its status as a gorilla. I certainly agree with that as a discipline. Now does the same hold true when it comes to selling a gorilla even if one were a ltb&h investor? For example, if a gorilla became over-valued by 100% or 200% or whatever percentage that you would choose to use, is there a point when you would make the judgement that it is not worth owning at the inflated price? Would the prudent course of action then be to sell all or part of it because there is a substantial likelihood that it will correct to a more reasonable valuation at some point? If your response is that one would continue to be a ltb&h investor irrespective of valuation as long as the longer term fundamentals are intact, then presumably there is no level of valuation that would cause you to say that one should sell a gorilla even if the valuation is massively out of line -- which, in turn, would mean that though it may not be advisable to buy a gorilla if it is over-valued it is fine to hold an over-valued gorilla that one bought previously. For this purpose, let us assume that we are talking about tax deferred accounts. I will make a confession -- the issue of valuation is one that has cost me dearly over the years in profit opportunity. Even my ownership of CSCO from several years ago was at the urging of an SI contributor whose opinion I respect -- but she just about had to hit me with a 2 by 4 before I bought it. For those, like me, who have tended to be concerned about excessive valuation of a high-growth stock, one of the most remarkable posts on valuation was on this thread but I don't recall who posted it. It was in relation to MSFT -- and it was to the effect that if one were to use conventional measures of valuation one would never have owned MSFT since its inception, given that by most conventional measures, it would always have been viewed as over-valued -- and sometimes grossly overvalued. Put lurk mode forever in your past and be a regular participant here. Please! Thank you for your gracious welcome; the quality of the intellectual discourse on this thread is remarkable -- I am just sorry that I did not find it much earlier. I tend to blow hot and cold as far as SI is concerned -- prolific posting for a while and then I go into hibernation.