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MikeBuckley wrote:
The book says that all Gorillas have been historically undervalued by the market. Some people take that to mean that all Gorillas will always continue to be unervalued by the market. I don't think that the market's tendency to undervalue Gorillas in the past necessarily dictates that it will continnue to do so in the future, especially with the proliferation of Gorilla Game concepts educating investors about the power of Gorillas. My thinking is that the established Gorillas will tend to be overvalued sooner than the young Gorillas or leading Gorilla candidates.

SlyAce wrote:

I don't have much to add to the above observation, but thought it was important enough to post it again. In essence, Moore et al. were arguing that the market was inefficient at valuing gorillas; as that inefficiency goes away, the profit potential of the strategy goes away as well, though I think we have a long way to go until that happens.

just because everyone (i.e. a large population, or, more accurately, a large enough population) knows about the gorilla game investing tactics does not necessarily yield diminished future gains. undervalued is a relative term. it possible that the same gains are still there, but the relative valuation of a gorilla becomes larger due to more dollars chasing it -- in other words, the economic value of gorillas may rise because their relative value to the economy is larger. remember the GAP/CAP charts? i don't recall seeing any numbers on them... do the foolish four/beat the dow strategies cease working because everyone knows about them? no (although there is evidence that as the dow embraces the so-called new economy that the beat-the-dow strategies may no longer be valid), they seem create a self-fulfilling prophecy.

besides, the difficult part is identifying the tornado and determining whether it is a jungle or royalty game and then identifying the gorilla candidates in the jungle games. i think that generates a lot of room for error and does not necessarily mean that the comparative returns are diminished. the time span, however, may decrease. although i would expect this anyway by extension of moore's law (different moore, not geoffrey).

my two pence.

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