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

To: Mike Buckley who wrote (52217)	7/19/2002 4:16:03 PM
From: ggamer	Read Replies (2) \| Respond to of 54805

<<<How have the Gorillas held up relative to your expectations? Have you bought any stocks lately? Do you think gorilla gaming is intact?>>> No, I really don't see how they have done better than other stocks during this stock terrorism. If you look at charts, all stocks were in a bubble and they all have come down to earth including our beloved gorillas. I have not bought any shares in the past 7-8 months. I sold my QCOM shares some at 80, most at 50, and the rest at 30. The last batch I sold, I took half and bought LEAPS that have gone down 80% in value since then. I am in the process of buying a house in the Bay Area which according to many is in a housing bubble at this point. As you can see, I enjoy going through bubbles. I am not sure if gorilla gaming is intact. Although I really like QCOM and it is the only LEAPS that I own, I am coming to the conclusion that the only three gorillas are CSCO and MSFT (INTC is a cyclical king). QCOM might become a gorilla someday but so far I am not impressed with the move to 3G. Many companies and operators are holding back on moving to 3G and I feel they are winning the game by doing so. GGamer

To: Mike Buckley who wrote (52217)	7/19/2002 6:00:57 PM
From: paul_philp	Read Replies (1) \| Respond to of 54805

Mike, I have done some thinking about the question of whether or not the Gorilla Game methodology is still valid. I think that everything in the book still stands except for the idea that Gorilla are always undervalued. I also think that there is a very simple fix to this problem. It requires a little background. Although Moore does claim that Gorillas are always under valued, an unfortunate statement, the statement happens in a context and it is worth understanding that context. He is arguing the the market does not understand and value the competitive advantages that lead of the long length of the Gorilla CAP. The market discounts the GAP so that it resembles other technology companies. A better statement would have been - "Markets always misprice the relative CAP of technology companies. When a category is in favor the market over estimates the CAP of the entire category and assigns large CAPs to all companies in the category. The Gorilla may still have the largest CAP but the relative proportion is much too small. When a category is out of favor the market under-estimates the CAP of the category and assigns small CAPs to every company. The relative CAPs are still wrong because the Gorilla CAP is overly reduced." A Gorilla Game investor must pay attention to the CAP being assigned a particular category. If the category CAP is too high then all stocks in the category are likely to be overvalued. If the category CAP is too low then the stock of the Gorilla will be undervalued. The only time the market correctly prices the category CAP is when the market is mature (on mainstreet) when there is a more predictable level of earnings growth and the relative share of the earnings pie is stable. Paul