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

To: Uncle Frank who wrote (48243)	10/23/2001 5:02:45 PM
From: Bruce Brown	Read Replies (1) \| Respond to of 54805

No argument here, but I felt that Eric and Paul's critiques were focused on the volume of posts that address those issues and the degree of repetition. Understood. I cannot say that I have read each and every post over the past 6 months. The Nasdaq has been in a downtrend since March of 2000 at the bubble heights. So we are now in the 19th month of that unwinding process of the bubble and the business cycle contraction. We could even make the argument, based on the earnings trend, that stocks are more overvalued now than they were in March of 2000 when earnings were still in the expanding direction. Remember the revenues and earnings numbers back then? We could also talk about the process that the market goes through of hitting a point where it starts to forecast out an improving economic situation and earnings recovery. Whether this is it or not, remains to be seen. We found out that January wasn't it. We also found out that April wasn't it. Is October it? We watch and wait. In point of fact, many of those discussions have been general in nature and not linked to the theme of the folder. Sustainable competitive advantage has been largely disregarded as a factor, while the concept of revision to the mean has emphasized. Which is actually a good discussion as we get closer to the 'mean' because investors with cash waiting for that opportunity will have the chance to pick some plums for the investment basket which have potential to benefit from their sustainable competitive advantage. At least economically sensitive stocks like Qualcomm at $38, a Microsoft at $40, a Cisco at $11, a Juniper at $9, an eBay at $40, a Brocade at $12, a BEA Systems at $9, a Checkpoint at $20, a Siebel at $12, a Ciena at $9, Dell at $16, Intel at $19, a Broadcom at $18 or an Arm Holdings at $8 may have been closer to reasonable than higher prices in the contracting economy. Were those prices close to the 'mean'? Not too many bull markets have launched from the type of S&P multiples where we currently stand nor have they launched without testing the lows, but time will tell what unfolds. No need to predict, but rather watch it all unfold. Toss in the war, terrorism worries and the uncertainty about the effects on the economy and it is enough to make one ponder a few things. We can easily avoid all of that discourse and simply talk sustainable competitive advantage and magically buy some of those companies at our own leisure. We can understand sustainable competitive advantage, but the price of entry valuation remains an important portion of one's investing success to watch that competitive advantage unfold over the next few quarters to years. At least that should be one element learned and taken from the past two or more years. Otherwise we are doomed to repeat. BB