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Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (2989)	1/30/2002 1:58:26 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 4690

Paul, >It seems to me - being a big believer in diversification - > that this subset of stocks (G&Ks) is too limiting. Nobody forces you or anyone else to put 100% of your portfolio in GG. One rather reasonable approach would be to buy X0% of total market index (not S&P which is already skewed towards G&Ks) and put the rest in G&Ks. One could even rebalance periodically if they wanted to. Now for you and for techreports, my opinion on EMC and INTC. EMC - the negatives first: 50% drop in sales last Q, 25% drop in sales last year, possible competitive and margin pressure, possible non-recovery in sales generated by bubble, management claims no recovery of margins above 4X% (vs. bubble 5X%), etc. The sales drop may be cyclical or maybe permanent "drop back to the mean" after bubble. Now assuming forward going ROE of ~17% (which is about 75% of their average ROE of 23% ;-))) we have expected annual return of ~7%. Not much... I will continue to hold it to see if this analysis is flawed, but I will sell it if I don't see a higher growth possibility. INTC - similar revenue drop by 25% YoY, gross margins however are still around 50%. Assuming 22% ROE going forward (80% of average 27% 10-year ROE), we have expected annual return of ~9%. Not much again, but a definite hold. I don't do P/E and P/S analysis, but would be interested if someone calculated possible P/E and P/S for these guys assuming a recovery and margins as indicated. Jurgis - have fun

To: Paul Senior who wrote (2989)	1/31/2002 12:36:00 AM
From: Shane M	Read Replies (1) \| Respond to of 4690

Paul, I focus on enterprise software when gorilla gaming. I love the economics of the companies, and you can play fairly early in the game or "bowling alley" with a little more security than some of the other tech sectors. Plus it's easier for me to understand the business than some of the other areas of tech. Externalities or value chains start coming into play fairly quickly with software companies as the switching costs are somewhat high for companies from the gitgo, and generally a supporting cast is already in place to help implement software even for fairly small companies. Just to throw out some names, some of the software companies I find interesting - SEBL, MANU, ITWO, PRGN. I own SEBL and MANU right now, have owned ITWO in the past but not currently, and am interested in PRGN although not as interested as I was pre 9-11. Have also owned PSFT, ORCL, MSFT and some others at various times but not now. I should probably just buy a software mutual fund, but heck - that's not as fun.