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

To: Sunny who wrote (24783)	5/15/2000 4:30:00 PM
From: Mike Buckley	Read Replies (3) \| Respond to of 54805

Sunny, please indulge us with your thoughts on how you made the choice to make the new investments into your 6 stocks. Did you make them with new money? I used a combination funds generated from the sale of stocks I no longer wanted in my portfoio and newly saved funds. If not new money, what criteria did you use to sell a previous investment and make the initial purchase? I don't remember the stocks I sold, but that's okay because I think my thought process is more applicable to your line of questions. I sell a stock when the fundamentals change enough for the worse to merit it or I sell if I believe a dramatically better opportunity exists elsewhere. In the last 18 months or so I gradually weeded out any stock that is not a Gorilla or a Gorilla candidate, the one exception being EMC which I thought was a Gorilla candidate though most everyone disagrees. For me, weeding out the stocks that weren't Gorillas or candidates is consistent with moving funds to dramatically better opportunities. For making initial or subsequent purchases, I consider the growth potential of the industry, the company and the valuation hoping to get the best possible long-term bang for my buck. However, for about a year I've limited all purchases to Gorillas or Gorilla candidates. When you decide to take a position in a company, do you stage in or invest all of the allocated funds in a lump sum? It depends on the situation. In the case of Qualcomm, I invested in some common stock in one lump sum. As I later became more and more confident of the company's long-term potential, about two months later I invested a second lump sum in LEAPS about 2 1/2 years out. Part of the timing issue was that LEAPS that far out were not available when I bought the stock. In the case of Gemstar, I bought a starter position based on the idea that part of its technology is applications-based, meaning I felt warranted in buying before the tornado began. Because part of the technology is enabling, I will feel comfortable adding more shares once the tornado begins assuming Gemstar still is the leading candidate for Gorillaship by a wide margin. Even so, on the recent dip I added a small portion of additional shares because of the improved valuation. If I remember correctly, I've only bought one position of Siebel, EMC, Citrix and Cisco. But I wouldn't rule out buying more if cash becomes available and the right valuation opportunity presents itself. When you have a winning investment do you average up (Russian Army support)? No. Instead, I weight my investments giving more weight to enabling techologies because the enablers have more power and control over the value chain. Lindy may or may not disagree, but I think the Russian Army approach is primarily a momentum play. I'm not a momentum player. One more bit of information. The only time I will sell a stock when fundamentals have not changed for the worse is if the stock reaches about 60% of my portfolio and has gotten that high primarily as the result of momentum players. In that case I'll sell a portion of the stock because it provides additional cash to use elsewhere, gets my portfolio more evenly balanced from a diversification slant, and locks in profit. I've only had that combination of circumstances happen twice and the first time I did not have the strategy in place. Wish I had. --Mike Buckley