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

To: hueyone who wrote (39260)	2/14/2001 2:53:43 PM
From: Uncle Frank	Read Replies (2) \| Respond to of 54805

>> The strategy I would like to follow is that of buying high quality companies at reasonable entry points and holding for the long term. Particularly in light of the last 11 months of grief, your strategy is without fault. The problem I continue to have is identifying "reasonable entry points". I have never felt an investment in qcom was unreasonable, even when it was at 175. And despite Merlin's keen interest and skill at valuation, I believe he has admitted to the same sentiment. The fact that I have been proven wrong hasn't improved my ability to spot a temporary top, so the most productive action I can take is to help the thread remain focused on identifying companies with sustainable competitive advantages. uf

To: hueyone who wrote (39260)	2/14/2001 3:30:49 PM
From: Mike Buckley	Read Replies (2) \| Respond to of 54805

hueyone, This expansion in multiples could not be expected to continue indefinitely... I would add that the achieved level of multiples couldn't be expected to be maintained indefinitely, much less increased. I suspect initiating a long term buy and hold strategy on Gorillas at the peak of valuations last year will have very serious, long term, negative consequences extending many years for those that did so. I'm the first one to be charged with painting with broad brush strokes, but I really do think valuations need to be addressed on a case-by-case basis to be truly meaningful. As for case-by-case examples, I very much believe that the investor who paid roughly $75 for Siebel stock early last year will do very, very well over the long haul, so much so that I believe there is a very reasonable shot at at least doubling the S&P500. Buying Qualcomm at $150 about a year ago I also believe has a terrific chance at doubling the S&P 500 over the following five or ten years. I also believe your thoughts need to be put in context. Yes, you're clearly right that buying Qualcomm at $150 has negative effects compared to buying it at $55, $85 or $100. Buying it at $150 also has a negative effect compared to buying a different stock at a more reasonable valuation. In other words, buying it at $150 has a negative effect compared to buying it or anything at a better valuation. However, do I believe that an investor is precluded from doubling the S&P 500 over the next ten years by buying Qualcomm at $150 a year ago? No, I don't think that. I applaud you, Down South and Mike Buckley for being farsighted and bright enough to get in to many Gorilla stocks or candidates before the bubble hit in full force. I know those guys well enough to know that they aren't as farsighted as you give us credit for. :) I'm sure not. The fact is that if the bubble had burst at the end of 1999 when the Naz had risen 85% in one year, we wouldn't have been able to know when it would happen. And in mid-1999 we didn't know a bubble of anywhere that magnitude was going to form in the last six months, so don't give us credit for getting in before the bubble. Just my thoughts. --Mike Buckley

To: hueyone who wrote (39260)	2/15/2001 2:04:21 AM
From: lurqer	Respond to of 54805

But much of the appreciation in the GKI stocks over the last few years was concurrent with an expansion in multiples(P:S and PEs) relative to growth rates that I have never seen before in my lifetime. This expansion in multiples could not be expected to continue indefinitely The subject that you have raised in this post and others deserves more serious attention and time than I have during the week. I hope to have more time this weekend. Until then, Bill Gross is one of the few people CNBC has on that is worth listening to - so consider (particularly the 10 year returns on high p/e purchases). pimco.com lurqer