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

To: LindyBill who wrote (1488)	4/25/1999 11:29:00 PM
From: Mike Buckley	Read Replies (1) \| Respond to of 54805

Lindy, I decided two years ago that it was tough enough to learn one sector, without learning the industrial, insurance, restaurant, and medical business, which you are in. You're right, of course. On the other hand, I wouldn't want to pretend that I "understand" the technology sector. At best, I am a carpet salesman, musician and serious travel photographer with vague impressions of the high-tech world. I can tell from reading posts in many forums (fora? :) that I have a better understanding of the tech sector than many who are plunking their hard-earned money into stocks. Yet I also realize that no amount of study will come close to giving me the inherent understanding of the many whose careers are in that sector. Moreover, I see people working in the tech sector who don't, in my opinion, "understand" the companies they are investing in. Just today I had a conversation with a person who is retired from a high-tech career. He owns EMC stock because it's a hardware company. I own EMC stock because, in essence, it's a software company. We aren't both right when it comes down to understanding the fundamental core competency of the company that sets it apart from the competition. (By the way, he's wrong. :) For another example that puts "understanding" into perspective, you might be surprised to learn that AOL was probably the second best stock I ever owned. If I remember correctly, it was a 7-bagger in a short period of time. I locked in my profits a couple years ago when, lacking the necessary vision and understanding, I seriously wondered if their business model would be successful. Given the exact same situation again, wondering about an untried business model in a brand new industry that was breaking all the rules and requiring that people change the way the communicate, I would make the same decision a second time around. Clearly, I was wrong about AOL's future. But no amount of study could have given me a clear picture that AOL was on track when their management team was trying something never before tried. And I suggest that a healthy portion of the investors who stuck with AOL didn't have any better understanding of their business model than I did. They were just luckier. My point? So much for "understanding a sector." There's also a lot of luck that is needed. Fortunately, I've been a beneficiary of one heck of a lot of luck in my ten-year investing career, so it's not as if I've got an axe to grind. I'm glad to know you don't think my portfolio is conservative. I wouldn't want to be labelled a wimp. YIKES!!!!!! :) --Mike Buckley

To: LindyBill who wrote (1488)	4/25/1999 11:48:00 PM
From: Mike Buckley	Read Replies (1) \| Respond to of 54805

Lindy, I forgot to respond to other details in your thoughtful post. EMC is one of our "Gorilla" candidates that took a dive this month. What's up with it? I think you mean, what's down with it? :)Hey, it "only" fell 30% and that's after a terrific long-term run-up. Even so, it has already rebound somewhat. I'm not concerned. By the way, is INTC going to be competing with EMC in their new business venture? I don't know. I don't think Intel's strategy has been that clearly articulated. I think it's fair to say that they will either partner with EMC (directly or indirectly) or become their competition. Citrix, Gemstar, and Siebel are three I know, and have stayed out of because they are "Small Cap". They are all off January highs, and are fascinating companies. They should be considered for our G&K list, IMO. I'm reasonably confident that they are already on one of the two lists, probably all of them on the W&W list. Just to set the record straight for those who aren't as familiar with these companies as you are, they aren't the smallest of small-cap stocks. The market caps of Citrix, Gemstar and Siebel are $3 billion, $5 billion and $3 billion, respecitively. Gemstar is off its April high and is much higher than it was in January, but that's for another discussion only if people are interested in it. About SAP, if you noticed my posts in response to their earnings report, you're probably aware that I think SAP can go a lot lower. I'm being patient because I don't think their problems are over. I do think the problems are relatively short-term though. Even so, I won't buy until information about the company becomes more readily and as easily available as the other companies I study. As an example, we're already nearly half way through 1999 and there aren't any FY2000 estimates at Zacks. It's almost time for Frank's casino to open. Better move on for now. :) --Mike Buckley