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

To: hueyone who wrote (46123)	9/3/2001 9:20:30 AM
From: Mike Buckley	Read Replies (1) \| Respond to of 54805

Huey: Perhaps some investors mistakenly lowered their guard after reading these four lines Perhaps they did. Shame on them if that's the case. If they did, it's just another attempt for individual investors to put the blame on someone other than themselves. Did those investors really believe that when a major part of the world went into a recession or a slowing of the economy from 5% to 0.5% as happened in the United States, their Gorilla-Gaming stocks would avoid unnerving volatility? Any peripheral examination of the stock prices of the most stalwart of Gorillas mentioned in the book gave reason for people to utterly disbelieve that statement about unnerving volatility. And if the readily available anecdotal evidence wasn't enough, perhaps they should have opened their eyes to a different statement by the authors: When the market lowers its expectations of returns and foreshortens the CAP at the same time, it is punishment indeed. Look how much area under the curve is lost! [Referring to Figure 4.18] It is typical for a high-tech company at such a juncture -- even a gorilla -- to lose a third or more of its market capitalization in a single day! In essence, I simply can't believe a book that says stuff like that caused the bubble of 1999. But as I mentioned, maybe I'm naive. --Mike Buckley

To: hueyone who wrote (46123)	9/3/2001 11:32:30 PM
From: tekboy	Read Replies (3) \| Respond to of 54805

In fairness to the authors, I assume these lines first appeared in the introduction of the original manual in 1998---well before the bubble and its attendant risk had arrived in full force. This is actually a controversial and rather important issue. Why? Because how one defines "the bubble" is crucial for guessing what will happen next. The bears were bearish all throughout the late 90s; think of Greenspan's "irrational exuberance" comment, prompted by gurubear Robert Shiller, in 1996. If they were/are correct, then the bubble hasn't fully deflated and we have a long way further to fall. The bulls were reasonably bullish through late 2000. If they were/are correct, we may rise again and reconquer the world (yeah, right). One could, as you do, describe the bubble as occurring from, oh, perhaps early 99 to early 00, which would mean it has now been pricked and we can go back to a steady-state market, or even an upward trending one. But practically nobody called it that way at the time, which is why one of the lessons I am in the process of drawing from the last three years is that nobody knows jack about market direction. tekboy/Ares@butunlikemetheydon'tadmitit.com