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Investing Books / Gorilla Game, The


Subject:  Re: BruceBrowns Simpleton Portofolio Date:  9/26/2000  6:26 PM
Author:  Padavona Number:  4536 of 8806

Over time I have used Gorilla/King style of investing and have enjoyed the great benefit of the model.

I too have come to this conclusion. This is off topic, but I felt the inadequacies of the Rule Maker criteria were exploited in today's RM article. If you haven't read it, it is a worthy and interesting read. TMF is selling The Gap from their RM port.

The problem I see is they overuse Gross and Net Margin to determine "the ability of a company to set rules" in an industry. The Gap fails to meet these criteria, so off it goes. Taken to its extreme, almost all of the TMF RM picks will be technology plays due to the higher margin business models.

I'll name one Rule Maker which will never be considered a true Rule Maker by TMF criteria: Wal-Mart. This retail giant will never meet the margin requirements. Yet Microsoft so easilly meets those requirements because they sell software (very high margin model).

Computers as we know them may not exist in 10 years. If the platform completely changes, where does this leave Microsoft? But Wal-Mart will still be there, this I am 9-nines certain of. There is no true competitor. K-Mart has been crushed. Target is miniscule by comparison. And now Wal-Mart is taking over (eh-hem MAKING THE RULES) an entirely new market - supermarkets.

Anyhow, the Rule Maker criteria should be able to spot Wal-Mart a country mile away. Margins should not be the criteria unless measured relative to their peers. So the Rule Maker ideal just doesn't quite do it for me. It'll get you into a lot of great tech stocks and teach you about balance sheet analysis. But you need The Gorilla Game to grasp which of these tech companies stand the best chance of taking control of an exploding industry, and therefor make the best investment choices.

That's just my take. Of course the GG will not get you into Wal-Mart neither. That is unless they start building optical networking gear.

I guess we need to adapt the gorilla game to retail investing. Anyone want to start a board?

(ducking thrown tomatoes)


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