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

To: tekboy who wrote (25254)	5/24/2000 11:25:00 AM
From: rushnomore	Read Replies (3) \| Respond to of 54805

Holding vs. trading I now realize that I overlooked another obvious factor that stacks the deck even further against trading, which is the greater number of decisions required. Let's assume that because of excellent skills in their respective areas Tortoise A and Trader B both have a .75 chance of being right whenever they do something. And let's further assume that they are operating in tax-exempt accounts. It's still not likely to be close, because each Tortoise operation requires one choice while each Trader operation requires two--with a resultant success probability of .56 as opposed to .75. tekboy: That was an interesting post, particularly the part about the cumulative probability of making multiple correct buy/sell decisions. But every day the LTB&H investor sees his/her strategic decision (to hold) result in either a gain or a loss. And the cumulative effect of those results is what gives the investor his/her long term gain or loss. So I don't think that this holding vs. trading argument can be solved by just multiplying decision probabilities. BWDIK.

To: tekboy who wrote (25254)	5/24/2000 11:42:00 AM
From: gdichaz	Read Replies (1) \| Respond to of 54805

tekboy: Buy and Hold vs .... One of the best cases for buying and holding common stocks for the long haul was made by a man who at that time made his living managing a mutual fund (Magellan) - Peter Lynch in "One Up on Wall Street". Many important ideas in it. One has entered into common usage - homeruns and "multibaggers". With trading, no mutibaggers are possible. Major gains yes - less taxes - but homeruns, NOT. Just a thought. Best. Cha2

To: tekboy who wrote (25254)	5/24/2000 12:43:00 PM
From: Jacob Snyder	Respond to of 54805

OT re: timing: I don't think there is a conflict between picking good stocks, and paying attention to valuation. Here's how I do it: I make a list of companies I'm willing to buy (best in the world at what they do, growing EPS at 20%+/Y, track record, pristine balance sheet). Then, I wait to buy until a company on the list is out of favor, and selling at the low end of its 5-year P/E or P/S range. Then, I hold until it is bumping against the top end of that range. (As an aside, I am considering changing this strategy to playing the gorilla game) This ends up being a form of market timing. For instance, I sold all my semi and semi-equips in Jan. 2000, because they all were way above the top end of their valuation ranges. I said to myself, "this is just momentum money, dumb money, weak hands, pouring into the stock, and it is dangerous to hold a stock whose price is supported by that rather than by the fundamentals." Having gone to 70% cash, I looked to see if anything on my list was in buy range. Since there was not a single company that I could buy, I just held cash, until there was. This strategy kept me out of MSFT at 120, and put me into it at 65. Is 65 the bottom? Did I time it right? The only thing I know for sure is that 65 is justified by the fundamentals, and is closer to the bottom than 120. LTB&H works, if (and only if) your time horizon is really 5+ years, and we are in a secular bull market. Since it usually takes at least 12 months for a stock to move from the bottom to the top of its valuation range, I can get 20% tax treatment while trading that range. Caveat: selling when a stock moves to the top of its valuation range, will probably get you out of a stock, just as it crosses the chasm. 2000 is going to be a year in which investors first question the momentum investing strategy, and then start questioning the LTB&H strategy. If we get a recession in 2001, a lot of people will be questioning whether stocks (any stock) is a safe investment. Yesterday, on the MSFT thread, someone suggested holding CDs rather than MSFT stock. Sign of the times.

To: tekboy who wrote (25254)	5/24/2000 2:34:00 PM
From: Boplicity	Read Replies (1) \| Respond to of 54805

Hello, Long time no post. If you remember back in March (right around the very top in the market) I was posting about how thought the G&K game was flawed. The point I was trying to make then was the speed that stocks get valued and how far out of whack they where getting valued at and that there was no point in holding them long term. The above thinking was direct to Kings and some G's. I also said that some investors that use the G&K method where deluding themselves into thinking that if I hold long term NO MATER WHAT the G will beat out the market in the long run, that comment was directed to MSFT as I think the story had changed. I actually think now is the time when you can dust off the G&K game and used it again since valuation have come down so far and appreciation speed will be much slower going forward. The only problem is available number of tornado stocks has been greatly reduce, so the number hunt reports you can do will also be reduced till another sea change comes along like the Internet. The market we just left could very well have been the best market you are going to see for years to come. So expectation have been lowered and patients will be rewarded, all playing into the hands of to those that like to practice the LTB&H method to investing. That is all, Greg