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I don't know whether Amazon is a Gorilla or not. It's my impression that its easy to spot a Gorilla after the fact, but not necessarily earlier. For example, I'm not really sure I buy into the fact that Cisco is a Gorilla (which I have owned for a long time). It has a great business plan and executes it well. It buys up a lot of companies to stay ahead of the curve, etc... but I don't think it owns any real technology that can't be replaced by others (JMHO), but I love it nonetheless.

The reason I brought up Amazon was not because I think it is a Gorilla (I don't own it), but because of exactly the points that were made regarding Amazon in response to my comments.

Margins matter. When I was experimenting with exactly the same ratio (only I divided by fractional growth, 0.6 instead of 60%) I noted that some companies with low margins but fast growth seemed to be undervalued by this approach. This doesn't mean that its a bad valuation technique, just as long as we remember to look at other techniques as well. Of course, if think you found the next gorilla you shouldn't care about valuations, right?

I'm still searching for the Holy Grail of valuation methods...

-Q
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