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

To: Thomas Mercer-Hursh who wrote (47826)	10/12/2001 1:23:06 PM
From: gdichaz	Read Replies (1) \| Respond to of 54805

Thomas. Thanks. Points well taken. In the context of GG there are a few ideas worth considering. The book was written by 3 people - different people with different backgrounds. They have since gone their own way so to speak. This thread has made major "adjustments" to the GG as a so called manual. Baskets thrown out - rightly or wrongly (IMO wrongly). Valuation a major discussion here. (IMO rightly). On the basics, we are getting to the point (IMO Nov/Dec) where the original ideas of the GG are back in force as a practical matter for those who wish to pick the wheat among the chaff. Once again, I would suggest that those here who are most interested in GG concepts look ahead - not back. Which companies will do well now or in the next months and years, and yes, most importantly, decades? Contemplating our navel may be great for some, may lead to spiritual enlightenment and may even be useful for investing. But I would suggest that GG ain't that. Perhaps this weekend would be a good time to look ahead as to which Gorillas (and Kings for those who take the header seriously) are worth doing DD on now - looking ahead to 2002. Best. Cha2

To: Thomas Mercer-Hursh who wrote (47826)	10/12/2001 2:14:49 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 54805

A great response. Thank you. I think we can get readily to the heart of it. First, for the thread, I am operating on the principle that it's best to leave out everything that is not particularly relevant to GGaming. If stuff sounds "general", well it's not to be construed as only applying to general stocks and not to Gorillas. With that being said, I also suspect we are in agreement on most everything. Which is to say that IF one purchases a Gorilla in the bowling alley and holds through until the Tornado has done its thing, and then MAYBE holds on longer, or not, and sells, then GENERALLY this (a) will yield phenomenal profits, and (b) span a time interval that is measured in years and which encompasses many ups and downs but mostly ups of stock price in between. At least I agree with this and I think this is what you are saying. This is the premise of TFM, after all, so we should not disagree. Furthermore I think I can go on to assume we agree even more in that it is silly to fret about buying at $5 vs $10 when one thinks long term value will be $100. In which case, I think both of us would say: "Buy. Get it over with and stop fretting." Where things become interesting are the exception cases. For example, where one thinks it's worth $100 long term (ten+ years) and the current price is $120. Or even $60. Which I think is our point of divergence, which has two roots. Firstly, I believe that there are reliable methods of projecting long-term price targets for a company's stock. Which methods are applicable to Gorillas perhaps moreso to non-gorillas because one doesn't have to worry about the degree to which the number of competitors muddy the waters. With this in mind, I can say to myself with some confidence "this stock should be worth between xx and yy in nn years". Which together with the current price of a share is a necessary and sufficient condition to assert that a stock is over-priced or under priced. IMHO. Second, I believe that it is not only possible, but likely, that a Gorilla's price can go through a period where its share price is well in excess of long term price targets (compared in present value dollars). Independent of the stage of the business (e.g. early, middle, late Tornado, Main Street...). A broad market bubble is but one of several factors that can lead to such an outcome. If we agree on these two points, then the conclusion that it is both possible (first point) and sometimes advisable (second point) to either avoid buying shares of a Gorilla, or to sell shares that one owns because of rational expectation of profit. If however we disagree on these two points, we are likely to fence with semantics around the derivative conclusions to no purpose whatsoever. Where do we stand? John.

To: Thomas Mercer-Hursh who wrote (47826)	10/12/2001 5:05:56 PM
From: Pirah Naman	Read Replies (1) \| Respond to of 54805

Thomas: Note, I have not the slightest dispute with the idea that if I had a good method of valuation that I believed in, clearly one could make better buying and selling decisions. I would love one. I'm just not comfortable about having found one yet. Which ones have you experimented with and tested? In what ways did they fail to satisfy your requirements? Apropos of which, as a companion challenge to my request that someone take some specific stock histories and show us what a specific buy/sell rule would have meant relative to a simple LTB&H, here's one for the advocates of particular valuation methods, at least those that relate to projecting a company's future like FCF. Take a couple of the stocks that interest us today, back up five years, using only the information available then, makes your projection, preferably with the mid, high, low bands. Then compare the projection to what actually happened and tell us how well they compared. To be fair, one should probably update the assessment once a year or so during that five years so that we see whether the model was self-correcting. While I remain willing to help anybody if I can, I am too lazy to do a project of that magnitude. After all, I have no compelling need to "sell" a method. However, if you are sincerely interested in such a study, I am willing to assist you. In that way the study can be done by you, to your specific requirements, but I will be available to minimize any struggling with the method. - Pirah