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

To: Bruce Brown who wrote (30182)	8/20/2000 10:04:33 PM
From: Rick	Read Replies (1) \| Respond to of 54805

Hi, all: This week there are a few changes to the FAQ. First, I deleted the Q and A regarding other gorilla threads. And second, the "Lady Oh" links still do not work. Hopefully, this is only a temporary thing. If not I'll have to delete them next week. However, in order to alleviate, at least partially, our serious "cuteness" shortage I posted Lindy's Zoot suit link. - Fred

To: Bruce Brown who wrote (30182)	8/21/2000 12:49:22 AM
From: tekboy	Read Replies (1) \| Respond to of 54805

OT Actually, it was very interesting. I had said something about how portfolio consolidation was important, so that you had few enough companies to follow them closely, but that some diversification was important as well, so that you could weather the occasional out-of-the-blue catastrophe such as Citrus. He mumbled something noncommittal, and I could tell he was holding back. So I pressed him, and he confessed that while he agreed with my basic point, he didn't think the example was particularly good, because he hadn't been surprised by the Citrus disaster. When I asked why not, he said there were three reasons. The first involved one of his personal rules, derived from long hard experience--"Never invest in a company based in Florida." The second involved another of his rules--"Make sure top management, and especially the CFO, is 100% capable and trustworthy." He said that by chance he had happened to get to know the Citrus team pretty well over the years, and had not been impressed. Consequently, their inability to manage the supply channel, and their lack of forthrightness about it, had not come as a surprise. (His comments on the new management team, for what it's worth, were pretty scathing. Just not up to the job, he implied.) He said that while he would not have invested in Citrus because of reason number two alone, his decision had been simplified by the third reason, the presence of Microsoft in the picture. Like a lot of software industry types, he had an amazing amount of respect for and fear of Microsoft's savvy and power. The fact that it had let Citrus exist, he said, indicated that perhaps three separate high-level Microsoft teams had decided, after exhaustive analysis, that Citrus neither posed a threat nor played in a large growth area to make crushing or absorbing them worthwhile. By investing in Citrus, he said, you were basically betting that you knew better than Microsoft management--something possible but improbable. And if it turned out that Microsoft had been wrong about the area's potential, he said, it would simply turn on a dime later and move into the space anyway. Either way, therefore, Citrus hadn't seemed to him to offer a low-risk, high-reward investing opportunity. He said that in his opinion the greatest handicap retail investors labored under was their inability to get to know managements well, down to the second and third tier. One of his tests for a company, for example, was whether the people you knew who worked there were people you respected hugely and would want to hire yourself. The extraordinary excellence of the personnel throughout the top levels of the organization, he said, was one of things that made Cisco such an absolutely extraordinary company, and that made their continuous outstanding performance understandable. tekboy/Ares@alwayslearning.org