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: ggamer who wrote (47409)	10/2/2001 7:57:40 PM
From: Uncle Frank	Read Replies (1) \| Respond to of 54805

>> when you hear GM who has writin books about long term investing Actually I think the GG was the only one that addressed investing. The others are about marketing and product adoption. Since investing isn't Geoff's forte, he relied on his two co-authors for ideas and direction. But his comments about long term investing weren't anything new. He compiled thoughts from Dodd, Graham, Buffett, Lynch, and all the greats, and combined them into captivating prose. Don't forget that Geoff's area of academic concentration was English. >> change his mind about his methodology I see that as reasonable and appropriate, GGer. His book presented a theory, and I've often characterized this board as a practical applications lab trying to confirm it. He/we should be modifying GG theory to fit the data, not ignoring it. uf

To: ggamer who wrote (47409)	10/3/2001 2:19:22 AM
From: Mike Buckley	Read Replies (2) \| Respond to of 54805

ggamer, I delayed responding to your post because I'm having a very difficult time thinking of anything that might be reliably helpful. Despite that, I'll give it my very best shot. Warning: that generally means you're in for a long post. :) I am really confused and frustrated these days. I admire the openness in which you share your feelings with us. I feel bad for you and all the others (probably countless others when we include the lurkers) who feel the same as you. What should an investor do in times like this? Assess (re-assess?) your tolerance for volatility and risk. (I consider volatility different from risk.) If you can't happily go on with your life accepting the current level of risk and volatility as you percieve them, move your investments around so you can again be happy. To help get a handle on risk, you might want to read Tinker's piece again. I have the right to bring up things that [Moore] was wrong about in the past Very true, especially in the context that you presented that comment. However, a solution to your current state of frustration and confusion might be to bring up things you believe he's also been right about. If you come to solid conclusions about the really important stuff he's been right and wrong about, you'll probably become more confident in any decision you make about your own investments going forward. Not that you should agree with me or that your perceptions should be the same as mine, but I'll go through those exercises as an example of an approach I believe each of us should be doing not just during these trying times, but at all times. Volatility The volatility doesn't bother me emotionally. For a combination of reasons, it never has (though I look forward to it resuming in the upward direction. :) I figure that if the current volatility doesn't bother me, it probably never will. Risk The current risk, as I percieve it, is relatively immense over the short term. That's because I think the executive management teams have the unenviable task of guiding their companies as they sell to customers who are every bit as uncertain about their immediate future as you and I. Those customers might also be as confused and frustrated as you and others are, and understandably so. That uncertainty and the risk that goes with it isn't fun, but it's risk that my wife and I can tolerate. We've talked openly about it practically every day, not only as the market tanked but also as it went up and up in 1999. We know and accept how our lives will be changed should the risk prove to be greater than what we believe it is. Over the long term, our perception of the risk is much more easily acceptable. In addition to everything Peter Lynch mentioned in the article provided to us by Scott, Gorilla Gaming adds additional safety by investing in companies with highly sustainable, highly competitive advantages. The stuff Tinker mentioned in his piece references even more safety. Though I don't feel relative valuations are partcularly low, the uneasiness I have about that for the short and medium term is lessened when I focus on the long term. Moore: right or wrong? As for Moore, I think he's made some fairly significant mistakes. Fortunately, none have them have applied to my investments. I haven't invested in Internet stocks. For fear of not being in the market during the measly 8% of the time that it tends to rise, I haven't accepted his advice about moving investments to cash. And when he and his co-authors wrote that Gorillas are always undervalued, you know I never believed that made any sense. Even more fortunate for me and my family, the things I believe Moore has been right about do apply to our investments. And I believe the stuff he's been right about far outweighs the stuff he's been wrong about (with the one exception that I really do feel bad for the people who took him at face value that gorillas are always undervalued.) I believe his thesis is all about investing in companies with probably the very most sustainable, competitive advantages and knowing when to be invested in them to minimize risk. I truly can't imagine a safer way to invest, assuming the valuation at time of the initial investment isn't too out of whack and assuming the volatility doesn't prevent us from sleeping at night. In summary, my and my wife's life are happy given our perceptions of the current risk and volatility and my perception about where Moore has been right and wrong. There's no compelling reason to change the make-up of our portfolio. But both of us are open minded about those issues; it's not etched in stone that we'll always feel that way. --Mike Buckley

To: ggamer who wrote (47409)	10/3/2001 11:18:04 AM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 54805

hi ggamer, i am sorry to hear of your problems. however, i would say look on the bright side: you are still relatively young and probably have your peak earning years ahead of you. that is a good thing--many older people who lost it all will never be able to recover. i would recommend that you take this opportunity to consider what is the most intelligent approach for the balance of your investing career. is that approach to be in 100% G&K stocks? not for me. i will grant you that GG has the allure of making a lot of money quickly. after all, the first thing i see upon opening my copy of The Gorilla Game is the inside dust jacket, which informs me that i could've turned $10,000 into more than $3 million if i'd only invested in CSCO stock back early on; and how much i could've made off Yahoo, etc. i'm sure this kind of marketing helped sell more copies than if the book were packaged as a dry business-strategy volume. unfortunately, the corollary of any get-rich-quick strategy is the possibility of getting poor even quicker. if you read my posts on asset allocation (or better, buy and read some of those books which are not get-rich-quick schemes), it will give you a context to see GG focuses on just one small part of the entire market of assets. and throughout history, one small part of the market has NEVER had extremely good times without extremely bad times as well. while one may do extremely well if one finds an asset class at its low point and sells it at the high point, it is unlikely that anybody can do that consistently. that is why it makes sense, IMHO, to hedge one's bets by investing in various different asset classes. like recent comments by others, i too look at GG as very interesting from its business-strategy implications. but as a sole method of investing for individual investors with a limited time horizon (EVERYONE has a limited time horizon), it would not surprise me to see this approach disappoint severely. although there are some thread contributors who invest in a variety of assets (like Bruce), i get the feeling that the main thrust of G&K has been to be 100% or nearly so in these stocks. a simple review of the G&K portfolio surveys suggests this to me. personally, i wouldn't devote more than 5% of my portfolio to these stocks as part of my (attempt at a) prudent asset allocation policy. it is not that there is anything inherently bad about them; rather, they are just one asset class among many, and i would not expect one class to outperform for long without a correspondingly horrible period thereafter.