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

To: Uncle Frank who wrote (30797)	8/31/2000 4:37:44 PM
From: Bruce Brown	Read Replies (2) \| Respond to of 54805

I think folks are beginning to forget some of the lessons we learned in April. Mr. Market is still capable of turning on us during September and October, and high fliers like jnpr will be particularly vulnerable to his moods. For that reason, I'm still using risk/reward as my primary evaluation tool. Viewed in this manner, Cisco and Qualcomm jump to the top of my screen. Yes, I noticed your risk/reward enthusiasm on the Siebel board as it broke out to a new high today to join the high flying list. <ggg> BB

To: Uncle Frank who wrote (30797)	9/1/2000 12:26:02 PM
From: the dodger	Read Replies (1) \| Respond to of 54805

I'm still using risk/reward as my primary evaluation tool. Viewed in this manner, Cisco and Qualcomm jump to the top of my screen. Frank, you sound a bit like me...I find myself constantly struggling to balance my fear with my greed...i.e...risk vs reward. (I know in my case, my "fear" is continually being spoon-fed by my lack of being to fully comprehend much of today's technology.) You mentioned your primary evaluation tool. Among other things, three ratios I look at when evaluating a stock is it's price/sales ratio, premium-to-industry ratio, and PEG ratio. Then I attempt to balance that against a similar $$$ investment in the S&P 500. Below is's a 10-year "big picture" of the G/K stocks. One thing that I find bothersome is the current average P/S ratio -- not so much the level, but the rate of acceleration from 1995 to today. It seems -- at least on the surface -- to have certain classic "bubble" characteristics. To me, the obvious "risk" implied there is if we were to run into a major capital constraint in the wireless/broadband build-out...i.e... a reduction in growth rates. Would we then revert to a more historic P/S norm? (I know the majority of my capital-gains are compliments of its P/S growth factor.) Do you think the potential reward offset the potential risk? Any thoughts? FY Price/Sales Ratios G/K Portfolio 91 92 93 94 95 96 97 98 99 '00 Prem PEG CSCO 6.82 9.28 9.62 4.33 7.75 8.22 8.27 11.83 16.88 24.33 0 2.6 EMC 1.37 2.65 3.97 3.16 1.85 3.48 4.63 10.79 16.91 28.19 257* 4.0 GMST --- --- --- --- --- 14.2 5.37 11.54 22.4 74.14 147 3.1 INTC 2.10 3.13 2.96 2.29 2.87 5.16 4.56 7.49 9.33 16.23 30* 2.1 JDSU --- --- --- 1.09 2.39 8.22 9.1 13.53 23.85 65.51 1286 MSFT 6.45 6.94 6.63 6.25 8.97 8.25 13.5 18.62 23.3 18.35 12 1.5 NTAP --- --- --- --- --- 11.11 5.06 7.27 12.71 39.75 495 QCOM 3.5 12.31 4.79 7.6 3.47 2.07 1.01 7.77 13.07 12* 1.4 SEBL --- --- --- --- -- 23.2 12.44 7.78 20.69 36.07 122* SUNW 0.83 0.73 0.7 0.41 .81 1.54 1.6 1.67 4.57 9.18 238 3.6 Avg. 3.51 4.61 32.48 288% 2.61 S&P500 Prics/sales = 2.2 Prem = P/S premium to their respective industries * FY ended 12/31 -- most current P/S available GMST is listed under "Electric Equip" sector and Quicken.com showed GMST selling at a 5008% premium to it's industry average, so I compared it to TIVO (147% premium) G/K "Feeder Tank" Portfolio 91 92 93 94 95 96 97 98 99 '00 ARMHY--- --- --- --- --- --- --- --- 13.69 119.69 730 BRCM --- --- --- --- --- --- --- --- 26.71 54.91 245 CREE --- --- 10.28 7.29 13.55 10.87 5.28 4.57 18.77 43.49 623 2.0 CTXS --- --- --- --- --- 22.58 23.26 16.9 16.73 27.58 -37 1.2 ELON --- --- --- --- --- --- --- --- 3.91 16.3 422 EXDS --- --- --- --- --- --- -- --- 25.1 65.3 273 ITWO --- --- --- --- --- --- 12.26 8.51 6.0 26.57 187 NT 1.02 1.35 1.27 .95 .95 1.03 1.25 1.49 1.89 6.26 61 3.8 PHCM --- --- --- --- --- --- --- --- 133.33 74.86 582 PMCS --- 2.25 1.55 0.87 1.47 1.96 2.29 7.24 12.23 41.75 318 PSFT --- --- 9.29 6.3 8 9.43 11.47 10.68 3.37 4.04 -65 4.7 RMBS --- --- --- --- --- --- --- 47.95 39.02 36.01 1218 -- RNWK --- --- --- --- --- --- --- 13.34 18.69 68.36 151 -- SNDK --- --- --- --- --- 5.24 2.23 4.2 2.77 12.7 71 2.5 WIND --- --- --- 2.98 2.51 5.97 13.39 10.18 6.9 7.35 121 1.6 Avg 1.02 5.30 40.34 326% 2.6 Misc. Stocks for Comparison 91 92 93 94 95 96 97 98 99 '00 CIEN -- --- --- --- --- --- 14.63 3.49 10.1 679 GLW 1.4 2.28 1.96 1.4 1.43 1.38 2.9 2.1 2.99 7.36 48 3.7 GE 0.87 1.11 1.3 1.5 1.47 1.73 2.07 2.71 3.34 4.58 71 3.1 JNPR --- --- --- --- --- --- --- --- --- 171.55 791 ORCL 1 1.75 3.97 4.91 5.05 5.15 5.35 3.22 4.03 20.13 70 3.5 T .64 0.58 0.76 0.76 0.76 0.93 1.35 1.94 2.5 2.6 13 VRTS --- --- --- 6.33 4.81 13.94 18.94 13.05 13.6 62.8 254