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

To: Thomas Mercer-Hursh who wrote (54600)	11/3/2003 10:49:50 PM
From: Stock Farmer	Respond to of 54805

Hi Thomas, Great example of frank and open disagreement. I was under the impression that the thread of discussion in which I was participating was the question "is The Gorilla Game likely to deliver other than mediocre returns". And since there were counter-parties to this discussion, it's rather dismissive of us for you to suggest that the discussion was "missing the real point". Because it just so happened to be the point that we were discussing. As far as "JS: In my opinion the theory around which he based [The Gorilla Game] is flawed. TMH: Have you read his other books? Well two answers: "Yes I have", and "So what"? The one I was discussing as flawed is the one with the flaw in it. If and when I get around to discussing some of his other works, then I'll cite flaws or praise appropriately. I'm not criticizing Moore randomly in some drive-by shooting, I'm criticizing "The Gorilla Game" as flawed, in direct response to a suggestion otherwise. What do I mean by flawed? I mean that the book (the specific book "The Gorilla Game") put forward a thesis to support a specific investment strategy, which strategy is (in precis... the details are in the book): buy a basket, weed out the losers, hold the winner and profit handsomely. One of the pillars of that strategy is the statement that the market fundamentally undervalues Gorillas, implicitly by more than enough to offset the fundamental over-valuation of the rest of the basket. And if this is the case then it takes only straight-forwards mathematics to see that such a strategy must deliver outsized returns. But is this the case? I suggest not. As we have already discovered, in the only real-world interval since the book has been published that the premise turns out to have been untrue. Whether or not this interval is an exception destined to prove the rule, well maybe the jury's still out on that. But having seen an exception to a rule put forward as the axiom on which the thesis of an investment strategy rests... well, Occam's razor suggests an appropriate response. And while you might maintain that nobody holds this strategy to be valid, there is some evidence that your point of view is not universally held. I wasn't arguing with myself! As far as my crusty, "unpleasant and offputting" style? Well, I'm no slick politician. I grew up on the farm where good men were obvious even when covered in $hit. Which was most of the time, or so it seemed. And if someone gets my Irish up, which usually takes some doing, well, actions beget consequences. The problem for me on this thread is that I'm not discussing some esoteric hypothetical investment strategy. I'm addressing a specific and highly popular investment opinion: buy Gorillas and be confident of long term capital gains. Which while I believe to be true (in retrospect), I don't believe is reliably executable (prospectively). Let's face it: while it might be quite topical, this stance of mine isn't likely to be very popular on a thread where some of the leading individuals may have staked personal reputation on the opposite opinion. And despite the fact that my opinion isn't based on having some axe to grind, a number of people seem to have taken it personally. For a few, I ran out of other cheeks to turn a long time ago, and I no longer care about preserving their face. If they want to stick it in a meat grinder while I'm busy turning the handle, that's their problem. Juvenile? Callous? Ok, I admit it. So shoot me or take it in stride and let's the rest of us get on with the discussion. I am not personally wed to my opinion. If it turns out to be wrong, then that will be a fact and I will have been wrong. And I'll have learned something new in the process. The market is completely unconcerned about preservation of face, and usually makes a chump out of one side of every position. One of my mentors was fond of an infuriating saying: "get over it"! But meanwhile in the learning process, I reserve the right to have this opinion and defend the basis from which it was forged. And I expect no less from those who hold the opposite opinion. There is likely some objective truth midway between multiple opinions. Hopefully what remains of this thread can check ego at the door and discuss the logic of a situation disconnected from our social standing based on the outcome. If we have the courage to disagree openly and without hostility based on facts and data, then in the end we'll forge a meritocracy instead of an aristocracy. And I do appreciate your leadership in this respect.