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

To: Uncle Frank who wrote (48572)	11/5/2001 3:29:40 PM
From: Wyätt Gwyön	Respond to of 54805

hi uf, i think KO is also overpriced, but at least their revenue stream is probably more predictable than that of most tech stocks. as for 22% gain in one day, this is imo typical bear market rally action (just taking SEBL as an example, i remember your making a comment about it eclipsing the 50 line back a few months ago when the market rallied...so now it's rallying again...and eclipsing 20??? with rallies like that, who needs bear markets?). unless you're a nimble trader, what matters is the long-term return, and the short term volatility will just be noise. that is really the point of comparing the expected long-term free c/f of any company to the risk-free return. unless i can expect a higher return from the stock, i would rather stick with the risk-free return. throughout history, stocks' riskiness has caused investors to price them cheaper than risk-free alternatives, hence providing a risk premium (higher expected long-term return) that rewards the investor for short-term volatility and risk. the interesting thing about the past few years is that stocks are now more expensive than risk-free instruments, even though they (stocks) are still volatile and risky. so it is the worst of both worlds (high risk and poor expected return). there have even been books written to try to justify the lack of risk premium (e.g., DOW 36K), although their arguments tend to break down rather easily. in any case, if somebody wants to have an expected return of 1% before inflation for holding risky assets (which historically had an expected return of 11%) when they could get 4.5% from the government, who am i to stop them. i tend to think the expected returns will shine through in the long run, but short-term perturbations are enybudy's gess. all the above is just my humble opinion.

To: Uncle Frank who wrote (48572)	11/5/2001 5:47:11 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 54805

UF, I'll take the bait. >While sebl was being sliced and diced, Tom Siebel announced some good news, and Mr. Market has bid up >the price by nearly 22%. Could I encourage you guys to prove that qcom, ntap, csco, and msft are >poor investments? First of all, nobody can "prove" that XYZ is a poor investment. At least because tomorrow little green men (persons? :-))) could land and offer 1 gazillion buckazoids for XYZ. Second, and personally, I am between G&K bulls and the "everything is overpriced" bears. I may lose opportunities on the G&Ks that I sold - MSFT, ORCL, CSCO - or never bought but I don't care, since I do not want to chase the bulls and buy G&Ks at unattractive prices. You may get great returns by holding them - prosperous investing to you... On the other hand, my money is in the market in S&P, health and tech sector funds, company stock and even some G&Ks and just "brand-with-moat-highROE-ARP" companies. So here we are. Jurgis - Price goes up, I sell; price goes down, I buy...