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Author: manfroma One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 677  
Subject: Re: Poll: Will you renew your subscription ? Date: 9/26/2000 7:54 PM
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> Could you share with those of us who are new customers of Gilder's how you would recommend best profiting from his views.

I've been lucky in that I started my GTR subscription 2+ years ago when Gilder was relatively unknown and many of my GTR stock purchases were made before the great bull runs of the past year. It's a very different situation today with Gilder's cult-like status and the bearish/skittish market environment.

On the other hand, the fall and winter of 1998 was a time of doom and gloom - remember the Asian financial crisis and default of Long-Term Capital? I nervously bought shares of GTR companies such as ADI, ATML, NSM and JDSU because I agreed with Gilder's assessment of their future. I also sat on paper losses for many months before these shares took off like a rocket. Here are a few lessons learned. My comments are aimed at the LTBH investor. If you're into momentum trading, stop reading now because I don't want to waste your time.

Lesson #1 - Understand Gilder's paradigm. Read past issues of GTR, re-read recent issues. Read books and articles to supplement, etc.. If you can't convince yourself that it's the correct paradigm, don't bother with GTR, i.e., don't invest in an area you don't believe in. It's an on-going process of self-education. The technologies involved are evolving rapidly. I'm still reading and studying things like CDMA, 3G, optical amps and filters, data comm protocols. Though by no means an expert, I'm convinced that investing in bandwidth abundance will be profitable.

Lesson #2 - I don't buy shares in a company until I've at least done a bit of homework on my own. A GTR mention is only a starting point for me. I try to learn something about its technology, the problem being solved, founder/management background, its market, the competitive landscape, past financial performance if relevant, special transitional situations (e.g., PRCM), other analyst reports. Once I decide to I want to own shares, lesson #3 comes into play.

Lesson #3 - Be patient, very very patient. If I'm convinced that the company I'm buying is poised for strong growth over the next few years, why the rush? That pretty much rules out buying or speculating on GTR mentions. The Gilder effect and associated price pop around the day of publication is amusing to watch, though IMHO, it's a silly game and a waste of time/energy/money. If you're bothered by it, you should question if LTBH is truly your investing style. I like to buy "low" (who doesn't). So I take time to look at charts, volume, momentum, lockup expiration, sector rotation, overall market trends, etc.., and decide on a price range I'm comfortable with. Then I either buy, wait, or sell put options. The wait has varied from a few weeks to many months. Then there are special situations like CIEN where I was able to pick it up for $7 (split-adjusted) after a crash from $50 caused by short-term negative news. I recently sold Dec puts on AVNX targetting a cost basis of $110. If it drops below that before Dec, I'll be buying or sell more puts. Compare that to the peak of $273 back in March when it appeared in the GTR. I nibbled into TERN for the first time this month at $43. TERN's been on the GTR list for almost two years. As it dips further, I will buy more. What about LNOP you ask? It hasn't passed lesson#2 yet so I'm not buying.

Lesson #4 - Avoid the heat of the herd, i.e., be contrarian. There are over 30 companies on the GTR list. I find it amazing that people complain about missing out when so many are at bargain-basement prices or have re-traced significantly from March highs. Anybody looked at LU, NT, JDSU, AVNX, A, TERN, CNXT, LOR, GSTRF, QCOM, PCS, MOT, LVLT, MFNX, NOPT, WCOM, NOVL, XLA, PRCM, ATML, LSI, NSM or TXN lately? Granted there are issues with some of these companies and you should make your selection after careful due diligence. But if you haven't considered nibbling into some of these at current prices, ask yourself if you really believe in the telecosmic paradigm and favor LTBH as an investment style. Since it's almost impossible to time the market and pick the lows, don't expect to see huge gains immediately and be prepared to sit on possible paper losses of 20-30% over the next few months. The bull is not dead, it's just taking a break and should resume its run in good time. When it does start again, the right holdings will take off much faster than average market indices. Don't try to pick the next 10-bagger. I never expected BRCM, CIEN and JDSU to give me returns of over 1000% over two years. I'd be thrilled with 100%. Come to think of it, this is a great time to be a new GTR subscriber. With a basket of GTR stocks purchased today, you might be here in two years making a post like this explaining how you made 100-500% returns on your Gilder holdings.

Thanks for the interest and hope this was helpful. Happy investing and good luck.

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