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

To: Jurgis Bekepuris who wrote (48005)	10/16/2001 6:23:49 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 54805

[Philosophical aside] Hmmm, the KO-BRK discussion shows clearer than two weeks of valuation chat that people would benefit from looking at the companies from numerical (valuationist?) point of view. It is really easy to get excited about great brands, great companies, great managers, great stories, great Gorillas. It is much more difficult to stand back and define your assumptions and perform a sanity check on these assumptions. I am afraid that a lot of people - including possibly me - still have way overinflated expectations of portfolio performance going forward. I hope for the best, since I like happy crowd, but I still cringe at quite a lot of valuations and expectations built on top of them. Good luck Jurgis - not a V-word again!

To: Jurgis Bekepuris who wrote (48005)	10/16/2001 7:49:26 PM
From: EnricoPalazzo	Read Replies (1) \| Respond to of 54805

I hope you understand that growing from 10 billion to 100 billion is significantly different than growing from 100 billion to 1 trillion. Even more so with 1 trillion to 10 trillion. USA GDP is 9.3 trillion just in case you forgot. Thanks for the lesson, and for the reminder. Two questions: -in exactly what way is growing from 100 billion to 1 trillion different than growing from 10 billion to 100 billion. Is this difference greater than the difference between growing from 1 billion to 10 billion? The answer probably seems obvious, but i'd be curious as to the explanation. -You seem to be implying that there is some theoretical limit as to the market capitalization of a company, and in particular that this theoretical limit has something to do with the GDP of the U.S. Could you explain that? >They achieved 32% over the past year. 32% what? Earnings growth? Buffett does not count his GAAP earnings since they are lumpy and totally distorted... Stock price growth? That's easy to achieve - just first drop the stock to 0. Revenue growth? I sincerely doubt it. Jurgis - even for MSFT, even for BRK.... btw, I think that MSFT's rate of growth of book value is far more apt to decline rapidly than is BRKA's. From what I understood, you were saying that BRKA's days of increasing (earnings, book value, market cap) at a 29% clip are some sort of golden age that we should just forget about. I was just pointing out the strangeness of this assertion, given that BRKA's market capitalization is still growing at that rate (haven't checked cash flow). It appears that we're still in the golden age, which does not of course mean that it won't end tomorrow. For the record I do not believe that BRKA will continue to grow at a 29% clip, but I do think they'll do very well in comparison to the market. ardethan@bythewayits10.5trillion.net