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

To: Dr. Id who wrote (1396)	4/21/1999 5:49:00 PM
From: LindyBill	Read Replies (1) \| Respond to of 54805

Does it make you nervous to have such a huge percentage of your portfolio in one (even potentially great) company I had an advisor I respect teach me, years ago, to "never make an investment that keeps you from sleeping at night." I sleep very well with 3 stocks. Especially when they are three gorillas. All of the things you mention can happen, but, IMO, will happen if you "diversify" also. If you are not comfortable with owning only 2 or 3 stocks, buy more, for heavens sake! For me, I would not be happy with only one stock, although I am being needled by "marginmike" and "peturro" about their "one trick pony's" in Q.

To: Dr. Id who wrote (1396)	5/7/1999 11:36:00 AM
From: LindyBill	Read Replies (2) \| Respond to of 54805

JBD posted some questions privately to me about certain stocks, and I realized that answering him was going to make me formalize my reasons for buying certain stocks. I have changed my criteria over the last two years, without ever really thinking though what I am now doing. The following is the process I have been going though, subconsciously, in making decisions on companies. I don't say it's the "right" way, or that I will still be using these parameters next year. But I think, truthfully, that this is what is going through my mind right now when I decide to buy or sell. 1: I do not want to be in small-cap companies. I have been burnt with them due to volatility and growing pains. I want to get in when management has learned how to make their numbers every quarter. No "Cienas", please! (no, I didn't own it!) 2: I assess all "Gorillas" first, then go down the line to Kings and Princes. 3: I want the company to be selling a system, not a "one trick pony" like Iomega, or boxes, like Dell and Compaq. No chip stocks, or companies selling equipment to chip makers. Stay out of anything cyclical. Intel was the exception, due to their unique Gorilla position, but I would not own it now, .(see # 5) 4: Is the company making a profit? I am just not happy playing the "greater fool" game with the "dot com's". 5: My big guess-- Can this company's stock double in the next 12 months? This is what I am looking for. I have been lucky enough in my guess's the last few years to hit this goal with several companies, and that is what has made me, and, I suspect, most of you, a lot of money. 6: Russian Army! Sell the losers and reinforce the winners. 7: If you see a company you like, and you are waiting for something to happen to it to make it the right time to buy it, when it happens, don't screw around, pull the trigger! I knew that Q would triple if they won the Ericson suit at least 3 months before it happened. I should have moved even faster than I did. 8: Same thing in reverse. If the story changes on a company you know and love, don't be sentimental, get out, get out, get out! (Dell, Uncle Frank!) Now, using these parameters, what do I think of the companies JBD asked me about? No big "DD", just off the cuff. AAPL: You have made a good buck. See # 5. Do you really see a double in it the next 12 months? INTC: See # 3 and # 5 CPQ: No, No, No! See 3 and 5 VTSS: my reaction is "# 3". But, you may know something I don't on this one, and "# 5" may be "yes" to you. AOL: God, what a tough call for me! I just sold a "six bagger": position, it has dropped, but I just don't see a double again this year. It has fooled me before. Bottom line; a real "speculation" for me. NTAP: A keeper, if you think # 5 applies. RMBS: A keeper, same reason. RTB, a lot of what you do here will be affected by your tax position. I don't have that problem. I guess the answer on that is to add in the cost of paying to taxes due to your decision making process, and then "pull the trigger!" LindyBill