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No. of Recommendations: 33
I started off planning to find about 10-12 really solid companies with good growth prospects but pretty soon the list began to grow longer and longer and I began finding it very hard to decide which ones to eliminate. So finally I've begun to classify these companies based on their risk/return potential which I use to build a portfolio that balances stable stocks with some higher growth stocks.

The following is in increasing order of risk/reward. What it provides is a framework within which to compare companies of similar risk/reward potential. So, formerly, while I was asking "Should I buy Oracle or Siebel?" or "Should I buy Nokia or JDSU?", I now compare investments within the same risk/reward class.

1) Giants - (Companies > 150-200B market cap)

1a) Lower Growth rates
Companies which dominate an industry that is more mature, although it has many good years of growth left. Can leverage their dominant position in this industry to enter and dominate new growth industries.
Choices= Intel, Cisco
Others = Microsoft, Oracle, Sun

1b) Higher Growth rates
Companies which are likely to dominate an industry that is earlier in its growth curve than the industries from 1a.
Choices = Nokia, EMC
Others = Ericsson

2) To be Giants - (Companies between 15B - 150B market cap)
Companies which are showing clear signs of becoming Giants. They are clear winners in huge growth industries and have a proven track record. Although B2B and optical networking companies have huge potential, there isn't a clear winner yet and there is less of a track record. IMHO, a NTAP or a BRCM offers better risk/reward than a ARBA or a SCMR.

2a) Bigger
Choices = JDSU, Broadcom
Others = Yahoo, Qualcomm

2b) Smaller (=> Larger reward potential?)
Choices = Network Appliance, Gemstar
Others = Siebel, I2, Redback

3) To Be 'Giants To Be'(!) - (Companies under 15B market cap)
Companies which look like becoming leaders in industries which could explode but are still in their infancy. Hopefully these are enabling technologies at the bottom of an immense value chain. This value chain has innumerable possible applications, many of which can only be guessed at right now. The more proof that the industry will, in fact, materialise, the better.

3a) Industry to materialise in near-term
Early applications of this technology are already being accepted and widespread commercial acceptance is likely in the near-term.
Choices = Echelon, CREE

3b) Mass-market acceptance is a little further out
More uncertainties about when and if this technology will be accepted.
Choices = LHSP, Ballard Power, Celera

Everyone has their own tolerance for risk/reward. I've decided to buy about 2 stocks from each category (ie. 1a, 1b, 2a, 2b, 3a) as my core portfolio and about 4-5 stocks from 3b as my "speculative" portfolio.

It is valuable to understand whether a particular company is a Gorilla or a Godzilla or a King but a Gorilla may not always make a better investment than a King or a Prince. Many people consider Oracle a gorilla while Nokia is a prince. Does that mean a GG investor should buy Oracle instead of Nokia? Oracle is a gorilla in the more mature database business but it is only a chimp in its most exciting growth area of E-business applications like CRM, B2B e-commerce, ERP and so on.

Therefore some of these companies are not "pure" Gorillas. But no matter how you look at them, they are heavyweights who dominate their industry and have a clearly defensible competitive advantage whether it be brand or an open proprietary architecture with high switching costs.

Besides, this classification isn't as clear-cut as it seems. Should Cisco be in 1a or 1b? Should Gemstar be in 3a because it's industry hasn't yet taken off although it is on the verge of doing so. I'm not trying to make a list of best stocks here. These are simply some stocks that I know and happen to like.

Comments?
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No. of Recommendations: 3
Give or take a few companies (mostly give in that I spread myself more thinly), your planned portfolio looks like my actual one. Which has been in its current state for the last year or so and seems to be providing me great returns and not causing hairloss or panic.

I didn't conciously follow the same decision tree you did but the end result looks similar, this is probably a good thing. I went more for the which big companies in a particular technology look like they are going to remain winners and which little ones look like they have a lock on something thats going to make them big. I divided the world up into sectors (chip/componant makers, box makers, service providers, software companies...) and sub categories and picked the company in each area that looked like a winner. I didn't pick a company in every sector and in some sectors I picked more than one.

Areas where you might look for other gorilla are in the telecom areas. For example Nortel as the Optical Supplier, AT&T or MCI Worldcom as a fixed line telco and Vodaphone as wireless telco. All these are int he top (1a,1b or 2a) sorts of category.

DD
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No. of Recommendations: 0
You have compiled a good list and your categorization makes sense. As a practical matter, you could probably buy each company on your list in equal amounts, forget about your list, come back in 5 years and be a happy camper. I don't follow Nokia, Sun, or Ericson, so my comment above necessarily excludes those. As to others that are not yet (and may never be) gorillas or kings, you need to watch more closely (e.g., CRA, BLDP, ELON, etc.) Good luck and let us know how you refine your thinking as your DD continues.
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No. of Recommendations: 0
Interesting choices. Your portfolio is similar to mine (I have 9 including Microsoft, Intel, JDSU, Celera, Nokia, considering LHSP/ELON/BLDP). My choices were based on the TMF Rule Maker/Breaker criterion. Rule Makers make up 80%, Breakers 20% - thats my risk tolerance. I notice that you're suggesting 10 potential gorillas and 4-5 speculative stocks (say Breakers), so to generalise, you have around 33% Breakers and 66% Makers (say Gorillas) - thats a personal risk choice, but be prepared to possibly loose all your Rule Breaker investments. You may also want to consider "non-technology" stocks to diversify in sector. I also have KO and PFE, and I'm considering PG, JNJ ,a financial stock or maybe an index such as QQQ (Nasdaq) or SPY (S&P 500). These days when you see the Dow pushing up and the Nasdaq on a drop, it's good for the soul to see some black on your portfolio.

Best of luck
Jim
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No. of Recommendations: 0
What about diversification? You've got emc and ntap, both good companies with good future growth potential, but they are both in the same business. I'll just keep ntap. Then you've got cisco, jdsu both in the fiber optic and networking. And you've got nok and ericsson.

How about adding a biotech company eg amgn to the list? An energy related company, eg ene or slb. You got the idea?

Just my two pennies.
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This is a nice thread. I also have a simular port. I'm about to exchange my AOL for qcom, cree, or rbak I can't decide. In semiconductors I have IBIS, in serious tank mode right now. Looking at CY (low PE)

There's a lot of talk about wireless this and that, but whats the weak link in anything wireless? The damn battery. Any GG developing here?
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http://boards.fool.com/Message.asp?id=1330599002268000&sort=id

This is a must see list for you... TMainzer has organized a list of players in the Paradigm port. Very useful info IMO.

Enjoy!

Agustin
(back to my prozac inhaler)
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