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

To: Pirah Naman who wrote (48276)	10/24/2001 3:45:53 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 54805

OOps... not pm.

To: Pirah Naman who wrote (48276)	10/24/2001 4:32:59 PM
From: Uncle Frank	Read Replies (7) \| Respond to of 54805

While you're conducting your poll, allow me to interject with a little historical perspective. This isn't the first time a spinoff/companion thread has been suggested, and at least 4 forums were started to focus on the following topics: Godzilla gaming Locating likely Gorilla breeding grounds Playing options on gorillas and kings G&K humor Disturbingly, only the curmudgeon thread survived the separation surgery. More disturbingly, we lost some highly valued contributors each time a topic was transplanted, some of whom never rejoined us. For what it's worth, I'd prefer a solution that would keep the valuation efforts integrated with the nomination and vetting processes, but bias it towards practical issues rather than general or theoretical ones. uf

To: Pirah Naman who wrote (48276)	10/25/2001 1:30:06 PM
From: Gayle Riggs	Read Replies (1) \| Respond to of 54805

Pirah and Thread, FWIW and all IMO. I think it would be a serious, perhaps fatal, mistake to separate "valuation" from GG. A useful model for GG must contain at least two fundamental parts, namely, 1) the theory of how a Gorilla is born and 2) the theory of how to value the Gorilla and those other companies involved in the game. Moore did a great job explaining point 1, but a poor job on point 2. What is needed is the theory (from which practice can flow) for point 2. On point 2, traditional valuation metrics are useful, but fall short of the mark. This follows because most CIGs (Companies in the Game) will seldom, if ever, have stock prices that reach value levels. What these CIGs offer are high, perhaps explosive, growth in revenue and earnings, but with much higher risk levels attached thereto than the Buffet type stock. Probabilities and discount rates are the tools we have (to my knowledge) for assessing risk. Perhaps the valuation model in GG needs to include a framework for analyzing and assigning values to these factors. I do not have a model for valuing CIGs. But, one thing I think I know, is that valuation matters, always. Hence, I think the GG needs more--not less-- serious work on this point. On a different, but maybe related issue, UF asked some time ago that if I came up with my "lessons I hope I have learned from high tech investing" to please share them with the thread. Other than the typical list one might come up with, like: valuation matters, accurate forecasting in high tech is problematic, bubbles burst, following stampeding crowds gets you crushed, companies live within the sector and economy, and so forth, I have not come up with much. These type "lessons", although important to keep in mind, will not accomplish my goals. What I am leaning toward is a mechanical rule, a rule that exits me (potentially) from a position as the stock price increases. This rule would be based on the premise that as the stock price increases, risk also increases. Hence, I should choose a higher and higher discount rate as the valuation rises, and a lower discount rate as the valuation falls, others things equal. However, potentially offsetting (or complementing) any changes to our discount rate are the probabilities of the CIG achieving our revenue and profit expectations. The above is incomplete and cannot be implemented until I (we) have a better model for point 2 above. In short, I (we) cannot make entry and exit decisions (in a rational manner) for CIGs until I (we) have a theory of value. Comments appreciated on the points of this note. Gayle

To: Pirah Naman who wrote (48276)	10/26/2001 2:26:49 PM
From: Pirah Naman	Read Replies (3) \| Respond to of 54805

POLL Results But first, a joke. Three constructions workers took their lunch break on the roof of the skyscraper they are building. The first one says "If my wife packed me another ham and cheese sandwich, I'm going to jump!" Opening his lunchbox and finding the ham and cheese sandwich, he jumps to his death. The second one says "If my wife packed me another tuna fish sandwich, I'm going to jump!" Sure enough, the lunch he didn't want was within, so he too jumped to his death. The third worker said to himself "Those guys were ridiculous. If you want a certain sandwich, make it yourself....Now, if I packed myself another peanut butter and jelly sandwich, I'm going to jump!" Opening his lunchbox.... Much to my relief, and not at all surprisingly, the poll results indicate that there would be very little participation in such a thread. As before, there would seem to be more risk of losing thread members as a result of valuation discussions on this thread than there would be through migration to another thread. I am personally in agreement with those who expressed a wish that valuation remain on this thread, with a bias towards application. I'm glad that Uncle Frank used the word bias, because some general discussion is necessary to enhance understanding. But now I ask you to reflect on the above joke, and then to consider something. Jurgis pointed out, correctly, that when valuation applications have been offered, there has been little response (see siliconinvestor.com. I could go back further in our history and point to a very applied "this is how you might do a valuation and here are some sample results and here is how they might change if..." type post which got very little discussion. I would also observe that of those who posted that they would like the valuation to remain (and even that they thought it potentially useful) but be more practical, I can recall few of them ever posting on the subject to either explain or seek explanation on the use of a valuation tool. Now I will be the first to admit that I am senile, do not read every post, and probably misread a bunch of those I do read. So I'm just asking you to reflect on this for more than 10 seconds before you decide that I am wrong. Thomas and I have admitted culpability for a long recent discussion which was more about testing of valuation than it was about valuation itself. And I maintain my guilt. However, in looking over the period which apparently raised the criticisms, I found a very "practical" discussion regarding the valuation tool that Jurgis was using, and I saw numerous openings in the discussion Thomas and I were having where (I think) questions or comments of a practical nature could have easily been interjected. I am just pointing out the dynamics I perceive and asking you to contemplate how we might make better use of our shared intellectual capital. It's very easy to say we want discussion to be of a certain nature, but the discussion actually taking such a course isn't going to happen by our wanting it to do so. - Pirah