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

To: darbyc who wrote (33443)	10/20/2000 5:50:22 PM
From: areokat	Respond to of 54805

That's a nice portfolio. My only suggestion would be to consider putting your future money into some of your smaller holdings. You also might want to build up a small cash reserve. Looks to me like you can give some of us advise.<g> Kat

To: darbyc who wrote (33443)	10/20/2000 7:13:00 PM
From: Seeker of Truth	Read Replies (1) \| Respond to of 54805

Some comments: 1. "Rulemaker" is for Fools and we respect their threads but this is the Gorilla Game thread. You should read the second edition of The Gorilla Game. Then check out the 10 companies to see which fit the definition of gorilla or else a very strong king. 2. You don't have to be told that diversification is a must because of the deficiency of our knowledge and that overdiversification will spoil your performance somewhat because you won't invest the most in the best. 3. There is no magic number of stocks to hold. If I am really sure that the company is a gorilla with a tremendous space to expand into and the price is reasonable then I would put up to 20% of my money into it. After all, you are highly unlikely to lose all of it. I don't think you should hold anything that you'd be afraid to put 10% of your money into it. In this regard I personally am against investing in Intel. It would take some difficult to imagine cataclysm to make it an unimportant, little valued company, but there are signs that they don't know which way to go. Look at the 64 bit CPU chip. Everybody else, MIPS,Compaq(DEC),IBM,HP,SUNW, has come up with one. Only Intel doesn't have one for sale. They seem also to have difficulty with Rambus. The gorilla status remains but is the domain still exploding outwards? The internet may put an end to the ubiquity of PC's; of course that will take a long while but if you see clouds at the end of the story, why not pick another? Intel wants to make servers but I don't see their edge over anybody else. Ditto for web hosting. There are different opinions about the future of BRCD's technology. The fact that you only have ~4% of your money in it shows that you too are doubtful. Most of the money I've made from stocks came from a very very few stocks. In my style 10 stocks is too many for anybody. In my case NTAP is now my largest holding, at 30%. But I feel comfortable with six or seven. I like to make big bets, as a way to avoid buying kings rather than gorillas. Bruce Brown makes small bets on young companies and has done marvelously, so there isn't only one way. He probably thinks your investment in BRCD is perfectly sensible. Chacun a son gout,nest-ce pas?

To: darbyc who wrote (33443)	10/20/2000 7:44:41 PM
From: Eric Jacobson	Read Replies (1) \| Respond to of 54805

Stan, you've got yourself a nice portfolio. Perhaps we should all be asking you questions on how to assemble and add to our portfolios :-) Everybody has their own preferences. Some like to feed the winners, some like a balanced approach, some like a sector approach (storage, B2B, fiber), while others use quantitative criteria (PE, PS, etc.). To a certain extent this was discussed at the beginning of the year when the G&K portfolio was put together. Some thought it should have been overweighted in QCOM and GMST. Frank weighted it evenly, and it has performed better as a result due to the strength of stocks like NTAP and EMC. Now, everybody loves NTAP and EMC and SEBL and ITWO, so who knows, maybe they won't perform well over the next 6-12 months. You just never know which stocks are going to take off or tank even within the G&K universe. So, in the end it's whatever you're comfortable with. That being said, my only advice would be to NOT shy away from stocks at or near a 52-week high just because they are at or near a 52-week high. In fact, I'd say you should add money to only those stocks that are exhibiting high relative strength. Starting there, I think that would eliminate adding new money to INTC, QCOM, and JDSU. All the others are fair game, IMO, and your choice should be based on your personal preferences for whether you want a more balanced portfolio (favoring BRCD and EMC, disfavoring SEBL and QCOM), adding to your winners (SEBL and NTAP), and your gut feel for which will be the best performer over the long run (NTAP?). Best of luck.

To: darbyc who wrote (33443)	10/20/2000 10:08:26 PM
From: Apollo	Respond to of 54805

Stan (I like that name <g>)... Fine portfolio. You ask many questions, all generally related to the same core issue.....ie, what should be your philosophy. Well, I am sure you know, that none us can tell you that as that corresponds to individual taste. My only suggestion would be to leave your portfolio alone for the moment. And work towards developing a philosophy with which you can be comfortable. Only after you have answered your questions to your satisfaction, should you begin to invest any further funds, IMHO. How to develop a philosophy? Read the many different boards; identify in your mind those personalities whose ideas you find attractive, and follow their posts to see how they do and react. Alternatively, go back to last Summer, '99, and read every single post here on G&K to the present. Time-consuming, I know, but you'll get at least 2 things out of this endeavor: 1. You'll be introduced to many personalities and styles and can follow both their progress and their reasoning behind their investments. You can see fit based on that, whether and from whom you might wish to weave together a philosophy. 2. You can watch how the GKI and W&W Portfolios evolved to the present, and what the rationale was behind the companies that this thread has come to favor, and which can be found in your portfolio. But until you answer your questions, I wouldn't invest another cent. I'd spend the time to study up and pick a philosophy. Whatever you choose, rest assured it will change and evolve into something different or refined. JMHO. Best of luck, stan

To: darbyc who wrote (33443)	10/20/2000 10:28:23 PM
From: Kayaker	Read Replies (1) \| Respond to of 54805

Stan, I don't see either AMCC or PMCS in your list of stocks. Both concentrate on chips for the communication sector and both increased earnings (again) over 30% sequentially, and the outlook for both is excellent. I'd highly recommend listening to the most recent CCs.

To: darbyc who wrote (33443)	10/20/2000 10:55:51 PM
From: tekboy	Read Replies (1) \| Respond to of 54805

um, Apollo's much smarter than me, but I just wanted to offer a minor dissent from his advice. I agree that you need to find the approach that works for you, but I disagree that you must wait to invest until you've found it. What he may have failed to take into account, I think, is just how differently people can go about finding the approach that's right for them. Wise Apollonian types like our doctor friend may indeed be able to get there by staying on the sidelines and doing lots of reading, but thicker or less mature types may need to get their fingers burned a bit in the process. I, for example, have found it difficult to learn lasting lessons without having a dog in the fight, without feeling in my viscera the greed, the fear, etc. It took me two separate brushes with margin calls to drill home the fact that everything can go down really really far, really really fast. It took me most of a year to accept what rel just pointed out--that at least some minimal diversification is wise because there is no way to predict just which of your super-high-quality picks will do well over any stretch of time. And even after lots of lessons, I'm still trying to internalize this stupid rule about having a disciplined exit strategy for options plays. Sooooo...what? Well, everything Apollo said to read and think about is worth reading and thinking about, but if you're the type that needs to smell the napalm in the morning, then you might not want to stay out of the game until you've read and thought about it. tekboy/Ares@experienceisanexpensiveschool,butsomewilllearninnoother.com

To: darbyc who wrote (33443)	10/20/2000 10:56:15 PM
From: tekboy	Respond to of 54805

<inadvertent copy deleted>

To: darbyc who wrote (33443)	10/21/2000 1:00:22 AM
From: Uncle Frank	Respond to of 54805

I think you may have mis-classified your post as "OT", Stan. It got some of the finest responses I've seen in recent months, and will doubtless receive more over the weekend. I hope you noted that there is no consensus among the respondents. That's because they differ greatly in age, tolerance to volatility, wealth attainment, and style. And that explains why you'll have to develop your own approach based on your unique circumstances. Making regular contributions to your portfolio is a great idea, even if you leave it in cash while you're pondering how to deploy it. It's impossible to predict which of your stocks is going to surge next, so try to remain relatively balanced. Most importantly, read this thread religiously. You'll never know when you might run into a post like this: Message 8534144 uf

To: darbyc who wrote (33443)	10/21/2000 2:10:44 AM
From: Bruce Brown	Respond to of 54805

Stan wrote: I'm wondering if anyone would care to comment on strategies for adding to one's existing positions. I'd be interested in any general strategies. And of course, I'd also be very interested if anyone would want to comment specifically on my portfolio situation. I currently own the following ten stocks. I will have money each month that I can use to purchase more shares. I remember when you first introduced yourself to the thread: Message 14196138 and what the holdings were at the time: I currently own CSCO, GMST, INTC, JDSU, QCOM, SEBL and SUNW. Over then next year, my plan had been to invest 20-25% of my income into some of these and/or perhaps up to 7 new stocks. I would decide on a monthly or quarterly basis as the money became available. Well, I just recently took a job working for Intel. Intel has a typical employee stock purchase plan: employees can purchase stock, using 2-10% of their income, at a price that is 85% of the publicly-traded stock price at the beginning of the plan period, OR, 85% or the publicly-traded stock price at the end of the plan period, whichever is lower. You've since added three important players in the all important data storage and transport industry to your portfolio - EMC, Network Appliance and Brocade Communications. The kind of growth currently being experienced as well as the future growth prospects due to the growth potential of 'data' bodes well for these types of companies. Improving metrics have been well noticed for all three over the past quarters. SEBL 26.85% QCOM 14.63% JDSU 11.32% NTAP 8.93% INTC 8.42% SUNW 8.30% CSCO 7.31% GMST 5.38% BRCD 4.51% EMC 4.36% I hope to do the Rulemaker legwork on each of my stocks over then next month or two and consider adding to those that best meet the Rulemaker criteria. I think that's an excellent idea. It certainly doesn't hurt to know the underlying fundamentals of each company's business. Couple that with CAP@Columbia to start to get a handle on other valuation tools - especially ROIC so that you know how each of your gorillas and kings (as well as that gorillazilla Gemstar) is performing under the surface. Knowing the trend in Cisco's ROIC can help you to understand the valuation at the moment and the direction it has taken. Likewise, knowing the ROIC trends in stocks like Network Appliance and Brocade Communications can help you understand their valuations at the moment. It's just another excellent tool that provides some insight along the way. I think your strategy of dollar cost averaging every month as your savings rolls in is an excellent strategy. I also continue to feel you should take advantage of the Intel employee stock option purchase program under the plan they offer. Not a bad problem to have. <ggg> We are more or less in the same 'age' range (under 40) so time is certainly on your side. Due to that time element, you have the luxury of being able to increase the risk/reward scenario in terms of the younger companies with higher growth rates that you might want to buy a few shares of each month if that fits your 'comfort' level. If not, there's nothing wrong with that. In your list, there are several companies growing over 100% y/y in revenues and 20% or higher on a sequential quarterly basis. Study the mass market potential for each of them - be it a consumer led mass market or an IT led mass market to gauge the kind of potential that each company has. Then study which of the companies are displaying the best ROIC, metrics and are executing the best. Based on that, you might find some on your list more worthy of additional shares than others. Price does matter when choosing entry points, but you are using a strategy of dollar cost averaging that is designed to smooth the cost basis bumps along the way. I just want to say again that I think you are off to a wonderful start and wish you continued success at Intel and with building your portfolio. BB