Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: James Clarke who wrote (763)	12/24/1998 1:23:00 AM
From: Jurgis Bekepuris	Respond to of 4691

>With Berkshire Hathaway, supposedly the topic of >this thread, bouncing off its >October low, why are we talking about Dell? We should talk about Berkshire when it's bouncing down, not when it's bouncing up. :-))) Jurgis

To: James Clarke who wrote (763)	12/24/1998 1:55:00 AM
From: Chuzzlewit	Respond to of 4691

First, the concept of risk is double barreled. On the one hand you have the risk of the earnings power of the underlying security. Generally, this is expressed in terms of the standard deviation of the expected value of the future cash flows. But you also have a market risk associated with holding the security. This kind of thing is imperfectly captured in the concept of beta. An interesting alternative was suggested by an academic who felt that a better surrogate for risk was the standard deviation of analysts' estimates. So, if our only disagreement is on the assessment of risk we can break that into two sub-headings: either we disagree in the riskiness of the security itself, or we disagree with respect to our tolerance for risk. I suspect that it may be the latter, rather than the former. I have a healthy appetite for risk (the beta of my portfolio is around 1.7), but I hedge it by writing out of the money covered calls, and I never use margin. That allows me to weather the occassional crash with only a slight wince. James, my portfolio is divided into two categories: rapid growth, and core holdings. My target rate of return for rapid growth is 40% per annum. Within this category are companies growing 30% or more per annum, and I do not buy companies that are not profitable, and are not in positive cash flow. Companies like DELL, ASND, TLAB, NETA, CSCO, etc. populate that portfolio. And they are held until there appears to be a long-term problem with growth. I do not invest in companies like Yahoo, BAMM or EGGS. Nor do I particularly like Biotech, because those companies are dependent on discovery rather than design and invention, and discovery is inherently unpredictable. We ended up talking about Dell in response to a direct question from a poster on this thread. TTFN, CTC