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

To: Eric L who wrote (36630)	12/14/2000 12:59:07 PM
From: areokat	Read Replies (2) \| Respond to of 54805

Some Gorilla Gamers are indulging in the same oversimplification, labeling any company with a vaguely appealing idea--or a zooming stock price--the next king of the jungle. In late February, for example, one excitable regular on the Silicon Investor boards started a discussion group devoted to Ventro, which he called a "B2B Gorilla in the Making." This up-and-comer quickly devolved into a came-and-wenter. It peaked soon after the discussion thread began and then lost some 95% of its value in a matter of a few months. Another company I've seen tagged a gorilla is Xcelera. The stock spiked after technology guru George Gilder praised its Internet caching products. It's now down 32% this year. Uh, did I sleep through something? I don't remember a lot of discussion about these two? I don't remember anything about them. Are there secret meetings about gg candidates on the come that some of us aren"t invited to? Tekboy, are you keeping this stuff to yourself? I'm feeling so left out. Kat: Thank you, Thank you, Thank you , who ever you are.

To: Eric L who wrote (36630)	12/14/2000 1:13:57 PM
From: Michael H	Read Replies (2) \| Respond to of 54805

I believe Futrelle is pointing on couple of things: (1) Be careful when crowning a gorilla (namely Intel ;-) (2) Check if the market is ready for the gorilla candidate products. If it is not, none of the baby gorillas will make it because there is no food around (remember compelling reasons to buy?). There is a lot of talk about hunting gorillas, but very little about GAP and CAPs. (3) The assumption that any valuation for a Gorilla is right any higher valuation is even more right - this is wrong. Even a Gorilla can be overvalued. As a matter of fact - I prefer some Kings. When a market is growing with 60%/year, the King just has to maintain its marketshare to grow its stock price by 60%. If growth falls short to 40%, the stock should still grow near to 40% because it has not been valued by P/E of 200, but by 20-30. When a gorilla falls short of expectations, maybe a monkey is rising, maybe market is slowing, maybe new product is not accepted, new technology is coming, down you go. Look at TRFM P. 121). Kings are lower risk sometimes - IMHO. Maybe we should look for King-Kongs (better name for the hybrid (Godzilla)). Michael

To: Eric L who wrote (36630)	12/14/2000 2:19:59 PM
From: Getch	Respond to of 54805

>>>How the Gorilla Game can make a monkey out of you. Money Magazine David Futrelle September 8, 2000 money.com; "Ignore the man behind the curtain, the great and powerful Money knows all." Another classic internet horror story to scare sheople and keep them from venturing away from their mutual funds. Is there room for another Prime Minister?

To: Eric L who wrote (36630)	12/14/2000 2:34:43 PM
From: BDR	Read Replies (1) \| Respond to of 54805

Red Herring on "Gorillas" redherring.com Their list of Gorillas: Nortel, Nokia, Broadcom, Applied Materials, Yahoo. I guess nobody reads (or at least understands) TRFM. Gorillas Pricey, yes, but with good reason. By David Lipschultz From the December 18, 2000 issue The term is now well worn, but it was only two and a half years ago that market theorist Geoffrey Moore first used the term "gorilla" to describe a company that had the lead in a growing market and was only tightening its grip. His book The Gorilla Game: An Investor's Guide to Picking Winners in High Technology (cowritten by Paul Johnson and Tom Kippola; HarperBusiness, 1998) popularized the idea that your smartest investment bet is almost always a large, high-growth company that dominates an important market to such an extent that every competitor is simply second tier -- price/earnings ratios be damned. Cisco Systems (Nasdaq: CSCO) has been this kind of stock; so has Intel (Nasdaq: INTC); Microsoft (Nasdaq: MSFT) was in the club until recently. Clearly it's optimal to find a stock before it reaches gorilla status, and a bet that you can do that does have a place in your portfolio. The odds a smaller stock actually growing to lead its market are tolerable when you consider that one great success can offset multiple failures (see our overview, "Small-cap Stocks"). But it is essential that your portfolio also include companies that are already dominant. They probably won't produce a 1,000 percent return in a few years, but despite their high prices, they will likely provide steady, substantial growth with relatively little risk. Did we say "despite their high prices"? Yes, because even after the bursting of the Internet bubble, a stock's price -- even relative to its competitors' prices -- is not necessarily the most important factor in the gorilla game. "Thinking only in terms of price to whatever -- earnings, sales, hits -- is incredibly stupid with these stocks," says Alberto Vilar, a respected stock picker and the founder and president of Amerindo Investment Advisors. "You've got to think about the potential size of their market and how much of it they will own." An investor who focused only on price would never have gotten in on Microsoft or Cisco. Both were always expensive compared to their peers. As for the argument that a stock has gone up so far that there's no room left to buy in, consider that Cisco is up over 200 percent since 1998, well after everyone knew that it was the most powerful networking equipment company in the world. The stocks below are all already world leaders -- or, in one case, a former one, because even a market leader can stumble. You won't find any overlooked gems among our selections. But they all illustrate how an already valuable stock can become even more valuable. In other words, the stocks we've identified may be expensive, but they are still poised for tremendous growth.