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

To: lurqer who wrote (40258)	3/11/2001 8:31:04 PM
From: Thomas Mercer-Hursh	Read Replies (1) \| Respond to of 54805

You might consider pondering the effects of p/e compression. I understand the principle well enough, but have you done any exploration on the specific impact on gorillas or gorilla-like companies during a secular bear? One of the things I wondering, for example, is to take something like the historical pattern of Cisco and have this bridge from a secular bull to a secular bear. During a secular bull we have seen Cisco repeatedly 1/2 or 2/3 of its value as a part of its volatility. One imagines that P/E compression would produce a similar sort of drop. But, having had that drop occur, wouldn't one still expect to see much of the same growth from that point due to the fundamental growth of the company? I.e., a one-time change in the average multiplier would be similar in impact to one of the volatility drops?

To: lurqer who wrote (40258)	3/11/2001 8:37:41 PM
From: stockman_scott	Respond to of 54805

Check out MSNBC now....there's a Silicon Summit on... msnbc.com msnbc.com Best Regards, Scott

To: lurqer who wrote (40258)	3/11/2001 8:46:10 PM
From: EnricoPalazzo	Read Replies (2) \| Respond to of 54805

No matter what is one's age, the prospect of one's capital depreciating for decades should be cause for concern. It may well be that you will have to live through a secular bear to appreciate the problem. They are very different from bear corrections. It's a human frailty to preoccupy oneself with that which one cannot control. I hold bear markets to be one such happening. If I recall correctly, bondholders or cash-holders don't fare better than stockholders in most secular bear markets anyway. At any rate, I'm certainly comforted by the fact that Buffett ignores macroeconomic trends, and has done OK long-term (in fact, he did quite well through the 70's as well). One drawback with Gorilla theory is that it can't be backtested to any secular bear market. The tech sector is so much more well-developed now than in the 70's or 30's that I imagine there weren't really any Gorillas back then. So it really remains to be seen how the GAPs & CAPs will hold up during a secular bear market, whenever one comes. I'm pretty hopeful, though. best, Ethan