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

To: Stock Farmer who wrote (43585)	6/17/2001 12:20:30 PM
From: Mike Buckley	Read Replies (3) \| Respond to of 54805

John, Thanks for taking so much time to express the details supporting your opinion. I don't pretend to understand the theory of math enough to agree or disagree with you about the extent to which the math supports your opinion. The following is at the root of my contention, which we might have to agree to disagree on: You see that term "G" is already embedded in the equation. I don't see that any differently than the growth that is already embedded in the DCF as a result of the person deciding what the components of the cash flows are going to be. DCFs generally look 10 to 20 years forward. The assumptions are less and less meaningful to me the further out they get. For me, that's the fictional part of a DCF. Compare that with the fictional part of a PEG, remembering that I use PEGs only looking two years forward, and I don't see any significant difference between the two valuation methods insofar as the extent to which they are and are not based on fact. I might change my mind about that if I were to take up a serious of study of math, but that ain't gonna happen. :) --Mike Buckley

To: Stock Farmer who wrote (43585)	6/17/2001 1:26:09 PM
From: Thomas Mercer-Hursh	Read Replies (1) \| Respond to of 54805

the company will grow proportionately at some average rate (G) so that all key ratios will be preserved. Gross margins, net margins, inventory, accounts receivable and so on. Isn't this a rather questionable assumption for a high tech company, particularly one undergoing tornado growth? Many technologies have a lot of heavy front loaded costs and an established gorilla can enjoy margins which it is unlikely to get prior to becoming established.