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

To: akoni-1 who wrote (36164)	12/7/2000 6:08:09 PM
From: John Stichnoth	Read Replies (1) \| Respond to of 54805

akoni, if I may--PEG can't quite be addressed that way. Maybe a better way would be to look a PEG over time, and see how it has changed. Alternatively, Value Line shows relative P/E over time. That can be compared to earnings growth. However, mechanical systems are inherently flawed. They don't foresee risk or continuing stock outperformance. The best example of the latter is of course Cisco. It has "always" been overvalued. But, if you failed to buy it, you've lost out on a very nice ride.

To: akoni-1 who wrote (36164)	12/7/2000 6:15:02 PM
From: Mike Buckley	Read Replies (1) \| Respond to of 54805

akoni, I don't know if you achieved your goal of "convincing" Uncle Frank The guy plays me like a violin. He writes anti-valuation stuff as sucker posts, knowing I'll write pro-valuation stuff. :) I think it's terrific that you're using valuation to impose some discipline on your stock purchases. Since Gorilla Gaming metrics are about limiting risk and the purpose of using valuation tools is also about limiting risk, it makes common sense to me that they can work will together. I wonder if you would mind explaining how you arrived at a PEG of 1.2 as being your threshold for buying a stock. --Mike Buckley P. S. Geez, I can't believe we're on the virge of a valuation "discussion" instead of having one guy hogging the microphone. :)

To: akoni-1 who wrote (36164)	12/7/2000 10:26:00 PM
From: Uncle Frank	Read Replies (1) \| Respond to of 54805

>> After (1) finding a great company with a great future, (2) analyzing and categorizing the company's competitive position via GG criteria, and (3) examining the company's financials, the PEG ratio can, I think, help determine some guideline on when to buy. Thats a very intriguing hypothesis, Mr. A. I guess the only way to prove it is to have someone volunteer to compute and post PEG ratios for the GKI on a regular basis. I'm hoping someone will volunteer to substantiate your theory. Any idea who we might rope into doing all that work <gg>? uf

To: akoni-1 who wrote (36164)	12/7/2000 11:26:31 PM
From: tekboy	Read Replies (2) \| Respond to of 54805

Buy = PEG is less than or equal to 1.2 (a 20% premium) Hold = PEG is greater than 1.2 and less than or equal to 3.2 Trim = PEG is greater than 3.2 Liquidate = A negative change in fundamentals Interesting. Please update us over time as to how this strategy works out. I must say that after figuring out the basics of the game, and stealing company-specific insights from the mavens, the most interesting and challenging financial topic I've grappled with since I started is portfolio management. One can make a strong case for buying a broad index fund and forgetting about it, or for buying a well-selected group of high-growth companies and holding them until the fundamentals change. Both these strategies have proven track records and are a great way to long-term wealth, but they have their drawbacks too (the first is boring and prohibits above-average returns, and the second leaves one open to giant declines on pullbacks). More active management would seem to hold out the prospect of both exciting returns on the upside and protection on the downside, but every study shows that in fact active management usually yields lower aggregate returns over time. Still, for psychological stability if nothing else, I find myself increasingly intrigued by the mechanical adjustment mechanisms some people use--like the one above, or Eric L.'s annual portfolio rebalancing. It seems like these should work to squeeze some extra profits out of all the volatility. But does anyone know if there is real evidence to show that they do in fact, lead to superior returns in the end? tekboy/Ares@alwayslearning.com