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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 (48070)	10/18/2001 2:44:01 PM
From: Mike Buckley	Read Replies (2) \| Respond to of 54805

Thomas, This certainly complicates the valuation problem. There are always lots of things that complicate valuation problems. But I don't think you answered my question: "Does it not matter whether the price of a stock is $10 or $1000, and if not, why not?" --Mike Buckley

To: Thomas Mercer-Hursh who wrote (48070)	10/18/2001 3:42:02 PM
From: gdichaz	Read Replies (1) \| Respond to of 54805

Thomas: A very thoughtful and key point re: the reason that the old accounting methods are not as useful for evaluating company prospects as they once were for smokestack industries or retail establishments. There has been a shift in what is "valuable" from plant and equipment and "sunk costs" to intellectual property. The key to growth now seems to be a "corner" on key intellectual property not "hard" assets. Yet any attempt to predict the "value" of a company would seem to require some means of including a factor at least for its knowledge base and skill in using it - and even more specifically its Intellectual Property. Cisco and Microsoft have been examples of that in the 90's. Qualcomm seems to be one now. And whether Qualcomm will have a data tornado (and if so, how broad it may be) as a follow on to its voice tornado is crucial to its future value, yet how is that quantified? I for one don't know. Again, for me based on my attempts in the past to judge quality by quantitative measures in a day job I once had, I found that very very daunting. The process was very useful as such but the "measures" obtained weak in correlation with actual performance. We found that what can be measured most easily was least relevant and what was most difficult or impossible to measure was probably most relevant. A very unsatisfactory "result"[sic.]. Perhaps that was just analytic inadequacy, perhaps the task is just plain difficult. At some point, after all practical attempts are made at quantitative measurements as proxies for quality, some plain old judgement has to be exercised to get the best overall basis for an investment. The GG (especially as discussed on this thread) helps provide a basis for that, and IMO that is its major strength. Don has helped focus on the key factors of just how that can be done. I applaud him for that. Best. Cha2