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

To: hueyone who wrote (40202)	3/10/2001 6:43:11 PM
From: Mike Buckley	Read Replies (1) \| Respond to of 54805

Huey, Good post. It will help generate good discussion if it already hasn't. I haven't looked to see if there are already some responses to your thoughts. I genuinely feel sorry for the many newbie investors who may have jumped into Gorilla Gaming with both feet last year while mistakenly thinking they were embarking on a "conservative strategy" as suggested by the manual and the thread. Depending on what you mean by "both feet," I feel sorry for anyone who takes on the risk of jumping into any investment thesis with "both feet" as I understand the meaning of the phrase. It just doesn't make any sense to do anything other than spending months and months of discussing an investing alternative before trying it. Even then the approach should be likened more to dipping the toes in the water than jumping in with both feet. Even though I read the manual within a week or two of its initial publication, I didn't switch to "both-feet" Gorilla Gaming until January 1, 2000. That was a full 19 months after I began playing, reporting on, and learning from the Front Office Game. It was also after dipping my toes into the water for about a year. Regarding your comment about it being a "conservative strategy," the last year's events have not changed my mind about it being that. There's not a single company in my portfolio whose fundamentals didn't progress very nicely in the last year despite the stock market's reaction. Regardless of how the stock market reacts to a company, a year does not make a long-term investment strategy. That observation isn't unimportant because each and everyone of us can agree that by definition Gorilla Gaming is a long-term strategy. These investors [who jumped in with both feet], in my opinion, may be decimated for years to come. If you're referring to the profile of an investor near or at a planned retirement, there's no question that the plan might be different today than a year ago. But that's the risk the investor jumping in with both feet took, not a prudent risk in my mind. If you're referring to the profile of a person still in the saving years, jumping in with "both feet" means in my mind that the person is continuing to save and invest. That person is buying much, much cheaper shares of the same market-dominating, cash-rich companies with highly sustainable competitive advantages. Most if not all of them dominate the market more today than last year. Most have more cash on the balance sheets than a year ago. And most have increased the quality of the competitive advantages and made them more sustainable than at this time last year. It's just my opinion, but for that profile investor, being steeped in Gorilla Gaming is probably an especially good long-term investment today, far from being decimated. In fact, I envy that person because I made the choice to end my saving years. (For the record, my personal experience is that this year is far worse than last year. Last year my portfolio was down 35% at its worst and that was in April or May. This year we're only in March and my portfolio is already down 47%. So it's not as if I'm speaking from a personal experience that has been immune to the short-term problems of Gorilla Gaming.) going forward, I would like to see the thread drop the equation of "low risk investment strategy", "conservatism" and "gorilla investing at any price". I think there has been sufficient discussion in the thread about that. The discussion you and I are having (thanks to you!) about that is a great example. Some people will probably always feel investing in a gorilla is okay at any price. Some will think it's a stupid tactic. Most important, there will always be enough people being vocal about both opinions that no one reading the folder could reasonably come away thinking the thread is to be equated with buying gorillas at any price. As for the thread being equated with a "low-risk investment strategy," we might have to disagree. I think pure Gorilla Gaming is a low-risk strategy if implemented for the very long haul (meaning with continued savings and investments) and with a penchant for valuation. The further astray investors get from "pure" Gaming, the more risk they take on. To the extent that we stick to pure Gaming, I also beieve it's an act of "conservatism" as you put it. Just my opinion. Rather than telling investors that "concern for valuation is pretty much a waste of time" as did the statement above, and as perhaps does the manual suggest as well, Where you and I completely agree is that valuation is very far from a waste of time, regardless of the investment strategy. Where we might disagree is that the manual suggests it's a waste. I too wish the manual would delve into valuations, especially considering that Moore has now publicly conceded that Gorillas are no longer always undervalued. But a failure to discuss valuations per se, especially in light of the great detail contained in Chapter 4 about the "Valuation of Competitive Advantage," is not the same as suggesting that valuation is a waste. maybe the thread should make it clear in their header that the purpose of the thread is to simply identify great companies with sustainable, competitive advantages, but go on to repeatedly warn investors that they need to come to their own careful and well thought out conclusions as to whether now or any other time is a good time to start a position in these stocks As much as I hate to think that we need to tell someone to come to their own carefully thought out conclusions before plunking down their hard-saved dollars, that can't hurt. But I would like to add that if we're doing that to protect someone, I think the person who is protected by that particular statement is beyond our ability to protect. The individual investor needs to take responsibility for his/her actions. In my opinion, The Gorilla Game manual severely understated the risks of Gorilla Gaming---at least with regard to applying to the turn of the century. I don't think we'll know what the risk is for another ten years. Therefore, I don't hold the authors responsible for understating it (or overstating it if that turns out to be the case.) Don't confuse volatility with risk. That leads to the next topic, the intent of the authors "to help private investors participate in the rewards of high-tech stock gains while standing clear of the market's unnerving volatility." I think that statement should be clarified by the authors, especially in light of having lived through the worst decline in the history of high-tech stocks as measured by the Naz. I don't remember everything the manual says about volatility, but here in the thread it got boring to see how many times we read about the three 40% declines in Cisco that occured in the mid- to late '90s. My thinking is that the investor who perceives that as "unnerving volatility" should stay very clear of investing in high-tech stocks including Gorilla Gaming. That observation maybe explains why I think the authors might have been (hopefully were) referring to volatility that is unnerving because it is unexplained as opposed to volatility that is expected and put into perspective once the long-term safety of Gorilla Gaming is fully understood. As an example, the manual is very clear about the circumstances that will cause a stock to tank in a short period of time even though the product is at the stage of the adoption life cycle that renders the company reasonably safe over a long period of time. The manual also explains the events that typically result in the stock market reacting in an upwardly volatile way. My point is that I believe the book explains reasonably sufficiently that volatility is an enescable aspect of Gorilla Gaming and that understanding it tends to render it less unnerving. Moore is about 36 months behind in making the necessary updates to the manual. Not to nit-pick (yeah, right :), but the manual is barely 36 months and maybe not that old. I don't remember the month it hit the shelves. There's no question that I wish the authors had waited at least two years to update the manual but, sadly, they felt comfortable to bring out their "Internet version." Just my two cents. Each of us has to make up our own mind about how we approach the thread and the manual. Thanks for putting your two pennies on the table. :) --Mike Buckley

To: hueyone who wrote (40202)	3/10/2001 7:12:54 PM
From: Thomas Mercer-Hursh	Read Replies (1) \| Respond to of 54805

may be decimated for years to come. This is, I suppose, the crux of the secular bear discussion. If the Cisco history is one we can continue to expect to see repeated in coming years, i.e., steep downsides being followed by steep upsides such that the net over time is to make the downsides more buying opportunities than negative impacts, then the GGamer who plunged in at last year's peaks may take a little longer to be happy about his or her returns, but in the long term context it will matter little. If, as others seem to think, we are headed into a period in which even gorillas will fail to grow substantially, then yes, it might take them a while to recover ... but the same can be said of just about any tech investment made on any theory at the same time since the downturn is hardly limited to gorillas. Such is the nature of the tech market. Indeed, if we assume that the investment is going to be made in tech so that we don't have to deal with the issues of tech versus pork bellies and real estate, then pretty much by definition someone plunging in a year ago will have lost a lot by now. But, let me ask you this? If we assume that we want to leave the money in the market and leave it in tech, the former because long term we know this to be the strong strategy, the latter because we believe this to be an area which will have strong growth potential even if the economy is sluggish, then what tech stocks would you want to be invested in? Aren't Gorillas still the best choice for confidence and predictable potential?