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

To: FLSTF97 who wrote (26730)	6/24/2000 1:12:00 AM
From: Mike Buckley	Read Replies (2) \| Respond to of 54805

If you are smarting from fairly recent purchases of high-flying stocks and are interested in the possibility of purchasing Rambus, please read the rest of this post. Be very clear in your understanding of what fueled the recent surge in the price of the stock. My thinking is that it's the agreements with Hitachi and Toshiba. While that might be obvious, the less obvious corollary is that it is NOT because of a huge increase in product adoption. As Fatboy and others have mentioned, consider the size of Rambus's market. Is it large enough to be the kind of mass market you want to invest in? Maybe so, maybe not. But be very certain of your criterion about that before investing. You remember what happened to the price of the stock when Intel delayed adopting the product. If you agree with me that the recent high price of the stock is based on the hope that Hitachi, Toshiba and others will fall in line to adopt, it's likely that any disappointing news about the adoption of the product will likely cause the stock to tumble. In these days of extreme volatility, I believe it's prudent to decide if Fatboy is right that a lot of hopes about the future are already built into the price of the stock. If you feel that's the case, look at the valuation of other emerging gorillas and gorilla wannabes. A similarly strong company with a more attractive valuation might or might not be the ticket for you. But if you go through the exercise of comparing the qualitative and quantitative characteristics, you have a better chance at being happy with your decision in both the short and long term. --Mike Buckley