Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: techreports who wrote (46063)	9/1/2001 2:36:20 PM
From: Seeker of Truth	Read Replies (1) \| Respond to of 54805

The lesson is not to think that growth rates of free cash flow can long exceed 25%. In fact it is only a very rare company that can sustain such a growth rate for 10 years. The pain of this period is actually worth it if we have been taught such a lesson. Because we will think valuation, valuation, valuation all the time. This gives us courage to go in when the numbers are attractive and courage to get out or avoid when the stock is skyrocketing and all the buzz is that it is still cheap. I don't think diversification by itself is the answer. if we diversify among stocks which are all overpriced, a hot retailer, a fast growing company that insures bad drivers, a tech stock with a new invention, a small drug company with a high return on equity and a price that is out of sight, a toy company with the latest and greatest that your kids want, and which they assure your ALL the kids but them already have,etc. the disaster is also sure. It boils down that we must buy them only when they are cheap by our valuation measures. I think there might be a wide variety of valuation measures that would work much better than no valuation method.

To: techreports who wrote (46063)	9/2/2001 2:20:24 AM
From: Bruce Brown	Respond to of 54805

Bruce, when you say tech is only one portion of the market are you saying that's a good thing or a bad thing? I meant it as the "market" is huge and technology is only one area of that huge opportunity for investors. In other words, I meant it as a portfolio asset strategy. Diversification could be accomplished within a sector or spread across several sectors of the market. When things are on the up and up for a growth sector and EPS growth is attractive - then a concentrated portfolio in a sector performs well. Likewise, when things are on the down and down for that sector and the EPS turns in the other direction - the performance is obviously a mirror to the downside. Whether one believes in asset allocation or not - holding all technology stocks from 1999 to present has given a rather shining example of what can happen in both directions. As with any sector, there are always some stocks/companies that buck the trend. There are technology stocks that have not 'broken down' in terms of EPS growth (as of yet) from the end of 1999 to present. The link you provided from SI's home page to the article "Bear Market May Be Investor Opportunity" in which Don Hays was quoted had Hays saying this: Hays' bet: The Dow 12,600, exceeding its Jan. 14, 2000, high of 11,722 over the next six months, and 2,800 for the Nasdaq in 12 months, which would still put that index well below its record high of 5,048. .....Moreover, Arms says, the index doesn't point to any near-term recovery in battered tech stocks. That sector still needs to do more "base building" before it can launch a recovery. Value stocks with good earnings prospects will lead in the recovery. siliconinvestor.com Hays, by the way, called it right this spring using the Arms Index and is now making the same type of call. The article is worth the read, IMO. BB