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

To: Pirah Naman who wrote (39396)	2/16/2001 3:44:40 PM
From: Uncle Frank	Read Replies (1) \| Respond to of 54805

>> in the tutorial I point out that identification of the company is the top priority. All valuation can hope to do is add a little bit... It is simply a tool for choosing between companies (Gorillas, in this case) given limitations of available money to invest. All Gorillas aren't created equal, Pirah, and imo valuation can do little to reveal differences in their relative investment potential over a meaningful period of time. I just don't think you can mix classical valuation metrics with GG metrics; the models are just too disparate. Referring to TFM, page 17, <GG> is not value investing. This philosophy is based on the notion that the market undervalues stocks that are out of favor with institutional investor, and that these undervalued stocks can be detected by analyzing the fundamentals of their business. Bolstered with the notion that most things in life regress toward the mean, value investors caount of depressed stocks rising back to a more average valuation. By finding the current crop of depressed stocks, buying them cheap, and selling them when they level out, this strategy makes money. On the surface, value investors are almost the opposite of gorilla-game investors, and typically, the portfolios of the two groups will have no stocks in common. This is because gorilla-candidate stocks are virtually never undervalued in the sense that a value investor means. Microsoft is a good example. There has never been a time in its history when it met the profile of a value investor's target. Nevertheless, the gorilla game shares with value investing the idea that the market is undervaluing the target stock - but not because it is out of favor, or because its fundamentals are being misjudged. Rather in the gorilla game, it is the fundamental dynamics of high-tech market development that are being misjudged, and the gorilla's exceptional competitive advantages simply are not being priced into the stock. >> Let's decide up front which companies fit where in the TALC. As in, can we come up with 2 or 3 groups? I'll update my numbers over the weekend, and then I will rank those companies I follow in terms of their apparent valuation. Let's not make this so difficult. You stated that you have identified 3 g&k stocks that are superior to the rest in terms of valuation metrics. Tell us which ones they are and we can begin nitpicking. If you are unwilling to share the fruits of your investigation, I can't understand why you introduced the topic to begin with. uf