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

To: chaz who wrote (43285)	6/7/2001 4:21:03 AM
From: JAPG	Read Replies (1) \| Respond to of 54805

Hi Chaz, IMHO, the issues of valuation, timing & portfolio management in the context of Gorilla Gaming could all be tied-up in a unified framework. Here is my summary of how I see it. The objective is to find a framework to minimize risk, while at the same time investing in GG stocks. To do so we need first to analyze the risks we are facing. IMO there are 3 types of risks: Company risks: This is the area where TFM excels at. TFM offers us an excellent guide on how to pick excellent stocks and separate the wheat from the shaft, thus minimizing the risk of investing at the company level, also provides us advice on when to get out of a specific stock if a new disruptive challenge appears. Industry Risks:This is an area of risk best suited for portfolio management. Within High-tech, the natural arena for GGming, there are many industries. The more you concentrate your investments in a particular industry, the higher the Industry Risk. If you concentrate 80% of your investments in the wireless industry, you are living with a high risk. If an slow down should occur in that particular industry, you as an investor would be highly exposed. Fortunately, there are G&K´s in a variety of industries that allow us to minimize this risk by creating a portfolio of G&K´s spread out in different industries. Market Risks:This is an area of risk that I explained in my post: Message 15374987 As we have experienced during the last 12 months, there is a risk that the market will take the whole hi-tech sector down. You can calibrate the amount of market risk you are willing to bear and still be a GG investor as I explained in my earlier post. Issue of valuation:This important point is mainly in the realm of the Company Risk. That is, if you consider other things equal: no fundamental shifts occurring at industry or market level. Issue of timing:This issue affects all three types of risks: - If there is a fundamental change at company level you may decide to get in or out of a particular stock. - If there is a fundamental shift in the industry, you may decide to get in or out of stocks in that particular industry. Change your composition of stocks among industries as you assess the potential gains in one particular industries versus others. - If there is a fundamental change that affects hi-tech-market/all-market, you may decide to change your free-risk (cash) composition. You may find pretty obvious everything I have said above, but nevertheless it helped me to fill some holes I found in TFM: - TFM addresses well Company Risk (unfortunately sans-valuation). - TFM addresses only portfolio management (and not fully) at an specific industry level, and in the specific phase where the Gorilla has not yet clearly emerged. It doesn´t address the issue of diversification on other G/K´s on other industries. - Only recently, G.Moore addressed Market Risk, by saying that there are times when you should be out of stocks altogether. I, along with many of you, agree that he should clarify this points in his next book and offer a more complete investing solution. I hope it helps, this exercise has certainly help me to clarify my ideas on what I should be doing that I am not doing now. Take care JAPG

To: chaz who wrote (43285)	6/7/2001 5:22:29 PM
From: freeus	Read Replies (2) \| Respond to of 54805

rehow could any of us seen that (economic downturn)? I don't know about others but I spent too long thinking "making money" when I should have switched to thinking "preserve capital". Without much capital it's very difficult to make money (again). Others may have been wiser about preserving capital for the "making money" part to begin once again. Freeus