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

To: Stock Farmer who wrote (47832)	10/12/2001 2:55:00 PM
From: Thomas Mercer-Hursh	Read Replies (2) \| Respond to of 54805

Where do we stand? Agreeing on a number of things, but not everything. 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. I think this is a point where we are going to have to speak in specific examples. If nothing else, if one's long term price is $100 and the price is above or near this long before one expects that, the obvious first question is why? The answer might be that the stock is currently overvalued, but the answer also might be that one significantly underestimated the potential. And, in terms of examples, while we might well come up with some with the advantage of hindsight looked at the peak of the bubble, there is also the question of how likely it is that that kind of distortion will reoccur. Firstly, I believe that there are reliable methods of projecting long-term price targets for a company's stock. Yes, divergence. My stance here is "hoped for, but not yet found or proven". Hence my interest in someone doing the exercise to show what their method would have said five years ago and how this tracked and changed since then. 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 There is no real disagreement here ... after all, we seem to have had this amply demonstrated, at least for moderate amounts of the future. Where we may diverge is on how likely this is outside of what seems to have been an extremely rare occurrence in the last couple of years.