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

To: Jurgis Bekepuris who wrote (53685)	3/20/2003 8:34:22 PM
From: Stock Farmer	Read Replies (2) \| Respond to of 54805

Well, it seems like we are disagreeing for the sake of it, rather than over the substance itself. Perhaps my observation is a bit too obtuse. Cisco, for example, is the Gorilla of IP thingies. However, there was a time when its business model was 2/3 selling slices of itself and 1/3 selling IP thingies. Not only that, but the 2/3 selling slices part of the business was subsidizing the 1/3 selling IP thingies by a factor of 3:1! It did nobody any good whatsoever to micro-analyze the gorillaness of 1/3 of the business without recognizing the other 2/3 and the significant contribution it was making to the business. Unfortunately for very many people, they did so. So it's all well and good to identify Gorillaness. But by itself that is an extremely dangerous metric to apply when one is investing. Being a Gorilla is not a sufficient condition to determine whether or not a company is a good investment. It isn't a necessary condition either. It is possible to entertain long-term profitability by investment in non-gorilla companies. Provided that one recognizes a good deal when one sees it - both at the time of purchase and at the time of sale. One can profit by investing in dog food companies as well as in technology companies. Some would say the former is more straight-forward than the latter. Thus, being a Gorilla is neither necessary nor sufficient for being a good investment. This means we can not say "If Gorilla, Then Good Investment", nor can we say "If Not Gorilla, Then not Good Investment". In other words, the identification "Gorilla" vs "Not-Gorilla" is not a determinant in the investment decision. Many people of course believe differently, and some quite passionately so. I am not one of these people. Some will try to make the point that in order to understand technology companies one must understand where the company is in its technology adoption life cycle and where the company is integrated in the value chain and the degree to which this integration represents a barrier to competition... so on and so forth. Well quite similar analysis applies to dog food companies as well. The terminology is different but the analysis remains the same. But for both dog food companies and technology wunderkind, these characteristics are only PART of the investment decision. The rest of the decision relies on an analysis of THE BUSINESS, and then the degree to which the company is likely to profit from the business. And then on top of that, the price of a slice of that business. Gorilla or not. Buying NT (not a Gorilla) at $0.53 could very well turn out to be a much better investment than Cisco (a Gorilla) at $53, for example. John