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

To: El Guapo who wrote (30749)	8/30/2000 5:54:31 AM
From: El Guapo	Respond to of 54805

A few more comments about the new economy. This bull market is likely to last the remainder of our lifetimes. Now, that's a bold statement. The reason is that our economy is undergoing a dramatic change in which the old measures of productivity no longer apply. When the GDP increases by 4% per year with no inflation, Greenspan scratches his head and raises rates. That 4% doesn't come from the old economy which is probably still growing at 1% per year. It's coming from the emergent, teeny tiny baby new economy which is growing at an explosive rate. And there's no inflation because it doesn't cost anything extra for a software engineer to imagine a more efficient way of coding. Shipping rates do not increase, we don't use more crude oil, we do not have labor disputes with labor unioned factory workers. Simply, the engineer gets more stock options, and his company's stock increases. Once upon a time, back in the last turn of the millenium. Some guy named Henry Ford came up with the brilliant (but obvious idea) of an assembly line to improve efficiency. Lo and behold, per man-hour efficiency increased by 100%-200%! And that created quite a long and prosperous bull market (until the late 20's) when he finally got all of the world's money and didn't have anything to spend it on. Now, our economy had encountered another invention even more revolutionary than the assembly line. It's software and network communications. Productivity isn't measured in cars per manhour. It's in software product per manhour. And, that's subject to the individual man. And it's not one man, Henry Ford, creating all of the world's production efficiency, and collecting its wealth. It's distributed among millions of geniuses, Priptu and Nguyen and Smith and Chan, each of whom has brief moment of advancing the productivity of their teams by 200% or more. Henry Ford's assembly line was limited by the speed of the conveyor belt, and the speed of his slower worker. The new economy, on the other hand, advances as fast as the imaginations of the brightest individuals and teams. Others may be left behind, but only briefly before they copy and improve upon the leaders. And the wealth is distributed to a larger base of deserving workers, unlike in the Henry Ford economic model. This economy is very new. There aren't even many good books to teach the science of good programming. For many programmers, it's still solving new problems every day. Give it 20 or 30 years to mature as a real science, and the difference will be the difference between alchemy and chemistry. The other amazing thing about software is that it takes only one person to create a product which can be sold to every single person in the world. Now, poor Henry Ford could only sell his car once to each person. He had to create a whole new car if he wanted to sell to another customer! But not Bill Gates! Furthermore, only 1% of the world's population even uses computers and software, much less networking. However, it's not ridiculous to imagine that they could. After all, which is harder: GM selling a car to everyone in the world, or YHOO selling advertising for an audience which is everyone in the world. Oh, but not everyone will own a computer you say. But who will need to own one, when all of the large corporations buy them and place them or give them away for free all over the world to improve their own efficiency. Which is cheaper? Having an ATM or a human teller? How about giving away a Palm Pilot style checkbook that serves as the ATM as well? Wouldn't that be a cheaper way to extend a bank's presence into untapped foreign markets? About $50 per new customer? Anyway, the bull market will continue until after we die. For the first time in history, the economy is limited only by the imaginations of all of the brightest people on earth. In 30 years, you will all regret how you didn't buy JNPR, CSCO, YHOO, PALM, HAND, or various other grossly 'overpriced' stocks because you were concerned about petty valuations when you were standing as the cusp of the greatest economic boom yet known to man. And all of this software 'new economy' will lead us into genetics in the next 5-20 years, and THAT will be incredible. Something different is happening here than has ever happened before in the past. Look at the big picture and figure out the implications. It's fairly obvious, and the evidence is overwhelming. There are riches beyond your belief, and that's for mankind as a whole. Of course, if you make a penny or two along the way, mankind won't mind. :) El Guapo

To: El Guapo who wrote (30749)	8/30/2000 8:01:17 AM
From: Apollo	Read Replies (2) \| Respond to of 54805

El Guapo....... Allow me to be the first Knight from the Roundtable to officially welcome you to the best, most intelligent and most civil Thread in S.I.'s Cyberspace. King Arthur will undoubtedly follow this with his own warm welcome. This bull market is likely to last the remainder of our lifetimes. Bold statement. I don't know about the Bull Market......but I agree with the essence behind your comment, which is that we're in a very Special Age, and good times will roll far beyond historic expectations. (And for this reason, in part, I think semiconductor cyclicity will moderate, since I can imagine processors and chips of many types, embedded into everything, including coffee cups! <g>) The other strength of YHOO, and the other 'new economy' stocks, is that they're almost entirely people-powered.... In this 'new economy', almost everything is powered by software. Much of this is true, and I agree to a large extent with your first post. My question for you is this: how do we pick out those Hi Tech companies with better, smarter software engineers, and distinguish them from those companies with average engineers. I mean, how can we as G&K investors see the difference between Sycamore and Juniper, short of being on the inside early, or being on the outside late, if the main difference between these companies is the quality of talent. I've given a hypothetical example, but I am asking you how can investors judge the talent differences between competing companies, prior to when the better company's stock price explodes? Sir Apollo

To: El Guapo who wrote (30749)	8/30/2000 2:24:53 PM
From: rushnomore	Read Replies (1) \| Respond to of 54805

OT El Guapo: Your visions of the future and your comments on valuation and the dynamics of tech businesses were very interesting, and I would like to here more from you on this thread. In one of your posts here (http://www.siliconinvestor.com/readmsg.aspx?msgid=14298320) you said "There aren't even many good books to teach the science of good programming. For many programmers, it's still solving new problems every day. Give it 20 or 30 years to mature as a real science, and the difference will be the difference between alchemy and chemistry." I am not a professional programmer like you, but do have some programming experience, and I have on my bookshelf some books that teach what appear to be very good programming principles. Isn't it true that good programming science exists but is not being practiced in most cases? What do you think?