Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next
Author: HockeytownJester One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 265  
Subject: RB/RM inconsistencies? Date: 2/18/2000 12:44 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 3

Hello, David and Tom, and other participants in this discussion board:

Well, I've finally gotten around to reading RB/RM. I read your first book a few years ago, and RB/RM is as entertaining and educational as anything I expect from the Motley Fool.

That being said, I don't agree with everything you say. I thought it would be worthwhile to solicit discussion on some things in the book that I do question. I'll start with this:

David's treatise on the "art" of finding a true Rule Breaker and riding that stock to outstanding returns is quite cogent. However, I detect a fundamental inconsistency that sheds light on just how much risk there is in investing in Amazon.com, et al.

David's final criteria for identifying a Rule Breaker is that it will be prominently featured in the mainstream investment literature as "grossly overvalued". At another point, he mentions how "momentum traders" drive stocks like Amazon.com to unprecedented heights - the implication being that the price does not reflect fair valuation. I understand many Internet stocks are held for an average of only about 7 days - consistent with this observation.

Well, what's it going to be? Over the last few years, has Amazon.com been typically undervalued or overvalued? I find these statements from the book contradictory.

My concern is that the risks in investing in Rule Breaker stocks are understated in the book. The investment race is a marathon, not a sprint, and even a *long* early lead does not necessarily mean one will win the race. In ten or twenty years, will Amazon or AOL more resemble king-of-the-mountain Microsoft, or now-defunct Visicorp, one of the many casualties to Bill Gates?

RB/RM goes a long way toward giving an investor the tools to find tomorrow's Rule Maker in its infancy. It's the best road map I've seen yet to try some bold investments in today's stock market, and I'm looking forward to promoting and discussing many of your ideas in my (otherwise stodgy, NAIC-based) investment club. But I think it will be a long time before we know if you're right.

Tim Klepaczyk





Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next

Announcements

Read the Book
Pick up your copy of Rule Breakers, Rule Makers today in the Fool bookstore.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Looking at Currency Ratios
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement