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

To: hueyone who wrote (40517)	3/17/2001 9:05:24 AM
From: hueyone	Respond to of 54805

A year ago or so we rolled out these statements from Buffet on this thread which may still have some timely significance regarding expectations going forward. The first is a spring 1999 "warning" from Buffet which I eventually ignored while capitulating to the tech momo madness in a couple of instances. By the way, Buffet has an incredible mathematical mind and definitely thinks about the math when he make a purchase. "In the whole United States -- which is, by far, the most prosperous country in the world -- there are probably around 400 companies that are earning $200 million a year after taxes, and you could probably name 350 of them. "Five years from now, instead of 400 being on that list, there'll probably be 450 on the list -- maybe 475. And a lot of those will be companies that are earning between $150 and $200 million today. So there'll probably be 20 -- or some number like 20 -- that come from nowhere. "If you look at the number of companies selling today at a price which implies $200 million or more of earnings right now, you'll find dozens and dozens of such companies in the high-tech arena. A very large percentage of those companies aren't going to fulfill people's expectations. And I can't tell you which ones, but I know there won't be dozens and dozens and dozens of these companies making a couple of hundred million dollars a year. And I know they're selling at prices that require them to be making that much money or more. But it just doesn't happen that often. "It's not that easy to make lots of money in a business in a capitalistic society. There are people that are looking at what you're doing every day and trying to figure out a way to do it better, underprice you, bring out a better product or whatever it may be. "And a few companies make it. But here in the U.S., after all of these decades and decades and decades of wonderful economic development, we still only have about 400 companies that have hit the level that would be required of a company with a market cap of $3 billion. And yet some companies are getting $3 billion of market cap virtually the day they come out. You want to think about the math of all this." The second Buffet statement is the fall, 1999 Buffet interview in Fortune magazine article in which Buffet makes the case that investors need to adjust their expectations downward (compared to the last 17 years) for stock appreciation for the next 17 years. library.northernlight.com. Best, Huey@don'tignoreWarren.com