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No. of Recommendations: 12
Aridian -

You have identified 2 great strategies for finding
great tech companies. Both focus on patents or
proprietary technology, or at the very least power
derived from high switching costs.

Since you asked in your linked post...I see no reason
to try to combine the two strategies. Both are useful
strategies which were designed to work based upon
past observations, with a logical look to the future.
But combining them is about as useful as combining
two healthy products like orange juice and milk.

The Rule Breaker strategy seems a little datamined
to me. I see no reason to disqualify a company as a
rule breaker simply because no analyst has publicly
declared it as overvalued. My guess is David Gardner
dealt with AMZN and AOL constantly being bashed by
Barrons, et al., and simply fell into the trap of
believing there was something to a company being an industry rule breaker if the analyst underestimated them. Heck if you watch the talking heads on TV these days you would have to declare the entire market as having satisified the "grossly overvalued" criteria. Apparently the only undervalued company on the planet is Phillip Morris. (Whooo-hoooo....BUY!!!!!!!)

I also believe the "Relative Strength requirement" is on the edge of datamining. And what RS should we use? 13 weeks? IBD? 52 weeks? Overlap? RSW? Naturally a gorilla or king is going to garner a lot of share purchasing, driving the price upward eventually. And yes AOL and AMZN were each running nicely prior to TMF's purchase. But just because the ramp up has yet to begin should not disqualify a company. This kept any strict Rule Breaker out of Qualcomm until last summer.

Better than following the Rule Breaker credo to a T, I find it is more useful to examine the logic. The other criteria are quite sound and have much in common with Gorilla Game criteria.

That's my take.


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