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I'm about 3/4 the way through the book and it has been very helpful for me to understand my own tech holdings. I've haven't changed anything in my portfolio yet, because I think I've generally been on the right track.

Here's a rundown of what I own and how I think they fall in the scheme of things. (Listed in order of size of holding). Let me know if you disagree.

Tech and internet
AOL Godzilla
YHOO Godzilla? King?
CRA Doesn't apply
CSCO Mature Gorilla
AMGN Doesn't Apply
JDSU King
AXP Doesn't Apply
MSFT Mature Gorilla
INTC Mature Gorilla
QCOM Young Gorilla
SGP Doesn't Apply
ATHM Godzilla?
GPS Doesn't Apply
AMZN Godzilla?
DNA Doesn't Apply
TLD Prince

My wife's:

NOK King
ORCL Gorilla?
HD King

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John,

NOK King
ORCL Gorilla?
HD King


Does Nokia have twice the market share of their competitor? What market are you referring to when making that decision? If not, they aren't a King.

Oracle is definitely the gorilla of the relational database.

Home Depot is not a King. It ain't a technology company, so it can't be a royalty or gorilla play. As above, don't forget that a King has twice the market share of any competitor.

--Mike Buckley

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John,

The other thing to keep in mind is that Gorilla, King, Prince is only a framework of thinking about technology stocks. For example DELL is only a Prince. A prince that has out appreciated every King on the planet.

The key is to understand the underlying market fundamentals that the terms describe and what these mean for your stock buying.

For example:

(1) Their will only be 1 Gorilla in each market. Consolidate behind it.

(2) Buy your enabling technology Gorillas no earlier than the beginning of the Tornado. Before this time it is not clear if the Gorilla-candidate will ever break out of its niche markets and enter mainstream and enabling technologies die in the bowling alley; on the other hand buy your application Gorillas during the bowling alley because application Gorillas can thrive in a niche even if it never makes a full blown Tornado.

(3) Sell your Gorillas only when a discontinuous technology which replaces the Gorilla's technology gains market acceptance.

(4) Hold your Kings lightly and sell them once hyper-growth begins to end. At the end of hyper-growth value will tend toward the mean (whereas in Gorilla markets value tends toward the extreme).

These are numerous mantras to the Gorilla game but they all have a basis in the underlying market structure of technology markets. If you can categorize your companies properly you can determine systematically when good buy times are, when you should hold a stock on a down swing, and when you should dump a stock ASAP. It takes the guess work out of buying and managing a portfolio and gives you the systematic tools needed to beat the market for years and years.

The rules are not some talisman. Get to understand the underlying rationale for the categories and rules. As you understand these things your sophistication will grow and you'll get a better understanding of which companies are worth owning and when to buy and sell these companies.

And of course it gives you a good idea of when to bend the rules to new realities in the market and new business formats.

For example, ELON is a hot company now. I may be wrong, but with a Gorilla analysis all I can see is an open, non-proprietary standard. How will ELON make money in this market? It is a good question we've debated extensively on the ELON board. Also, my contention is that the technology hasn't even crossed the chasm yet. Thus too early to buy into this enabling technology. As more information comes in I'll make that call. This same sort of analysis kept me out of RMBS and into QCOM in 1999. RMBS has subsequently (IMHO) taken a step forward in the bowling alley) and thus it is not until Monday that I bought into the stock. Interpretations on these things vary but this is how I have used the tools of the Gorilla game to analyse these stocks I think it was not just luck that I chose Q over RMBS in 1999. It was systematic analysis. Analysis any of us can do when applying the framework.

Another excellent example is BRCM. Love the stock. It is in hyper-growth but I can't find the requisite Gorilla characteristics. I categorize it as a massive King at this time. I will hold it only so long as its market is in hyper-growth. I also know from industry knowledge that BRCM's technology is a lock for about a year given the product cycle and the high short-term switching costs of the product. If I see the pipeline slowing down I will dump. Happily ~:) the pipe line is bloated at this time.

On the other hand, Cisco, a Gorilla, is fit to hold through market slow downs and huge stock corrections. For reasons related to its Gorilla power. Reasons which you will discover in the manual and from your own observations.

Read the manual with things like this in mind. You'll never see the stock market in the same way again.

Good luck all!

Tinker
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Tinker,

Read the manual with things like this in mind. You'll never see the stock market in the same way again.

For me, nothing truer was ever said. The manual changed my entire outlook on how to evaluate all companies, including those that aren't high tech companies.

--Mike Buckley

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Tinker,

I working my way thru the book and with information received on this thread I hope to get a grip on the technique. Its thru posts like yours and others I feel I will be able to understand the techniques. Keep up the great posts, some us older generation are slow learners in this high technology world.

John
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John,

You're in good hands with the book and with fellow investors like TinkerShaw and Mike Buckley. Regardless of your 'older generation' status, it is not too late to teach you new 'tricks' that will reward you with the time you have remaining in your investing life.

Take the time to read and digest the book ASAP and then fire away with questions.

BB
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Thanks for all your help and great discussion. I've finished the book and also finished reviewing my portfolio. Here's my final thoughts for awhile (I've left out the non-tech stocks) as I'm starting to learn a George Crumb score while returning to my percussion teaching gig tomorrow. Sorry this is so long, but making myself post this on the board has forced me to think more rationally and less emotionally.

AOL Godzilla. but no longer high growth. Someone said "They'll have to pry these shares out of my hands" Well, they did. Time Warner shareholders will get a great deal, but not AOL shareholders like me. This was 40% of my port, I've sold it down to 25%, and I'll make a decision on the remainder next quarter.

YHOO Godzilla. Financials as of 3/31/99: Sales growth 181%, Gross Margins 89%, Net Profit Margins 32%, No Debt, We'll know more later today.

CSCO Mature Gorilla. Financials as of 10/30/99: Sales growth 49%, Gross Margins 65%, Net Profit Margins 22%, No Debt. I'll be adding to this great company.

JDSU King. Financials as of 9/30/99: Sales growth 53%, Gross Margins 51%, Net Profit Margins -61%, No Debt. I'll be watching growth and competitors ETEK and SDLI.

MSFT Mature Gorilla. Financials as of 9/30/99: Sales growth 28%, Gross Margins 86%, Net Profit Margins 41%, Cash to Debt 19

INTC Mature Gorilla. Financials as of 9/25/99: Sales growth 9%, Gross Margins 59%, Net Profit Margins 26%, Cash to Debt 11.3

QCOM Young Gorilla. Financials as of 9/30/99: Sales growth 14%, Gross Margins 41%, Net Profit Margins 13%, Cash to Debt 14. I've recently added to this.

ATHM Godzilla. Financials as of 9/30/99: Sales growth 623%, Net Loss $735 M, Gross Margins 52%, I'll be watching the future of open access.

AMZN Godzilla. Financials as of 9/30/99: Sales growth 100-300%, Gross Margins 21%. Becoming stronger in the marketplace as it loses more money. Watch carefully.

Just today I purchased:

BRCM King. Financials as of 9/99: Sales growth 149%, Gross Margins 60%, Net Profit Margins 22%, Cash to Debt 176. Dominant market share position in chip design for cable modems, digital set top boxes and gigabyte ethernet networking.

ITWO Gorilla in Supply Chain Management Software with its TradeMatrix product.

Thanks again everyone, especially Bruce (my daughter and I are going to see Faust next month), Tinker and Mike.
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John,

Outstanding portfolio and perspective. I am particularly pleased with your mention of BRCM as King since BRCM got "dissed" on the Silicon Investor board the other day as maybe not even a Prince. Hmmmm, 80%-90% share in all their markets, and all of their markets huge I mean HUUUUGE and just emerging or in the late stages of the bowling alley (with the exception of their new home networking technology that is still pre-chasm and maybe digital satellite) - and in hyper-growth. Sounds as King like as any I've ever seen. I may have to pay the SI fee just to defend BRCM's honor.

In any event, looks like you have a good conservative portfolio that should have market beating returns for years to come (just remember all those Godzillas are much riskier than the Gorillas, and probably more so than the Kings as well - Godzillas are just such a new creatures). You look like you know what to look out for and have a good investment horizon and patience and best of all some taste in the fine arts (although I notice no mention of the band Hole was made in your musical discussion - but its an acquired taste). I'm sure your daughters will come around to similar musical tastes before you know it (all it took for me was becoming a teenager).

Look forward to future comments.

Tinker
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Tinker and John,

Broadcom is a 'hit'. I've certainly pigeon-holed it into the royalty game, but have been so impressed by their fundamental numbers and growth rate that it has resided in my portfolio since December of 1998.

It was quite nice to see the all time high on Monday, but yesterday pretty much snagged that right back to the tune of -$27 and change. Regardless, in terms of a silicon 'pick and shovel' internet/networking broadband play - I consider Broadcom a must have in my 'basket'. However, I see it clearly in the royalty game. That's not a bad thing as I make a lot of money investing in royalty plays, but in terms of long term risk aversion, one must watch it closely.

Had I only bought more of it.....

BB

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Where are they dissing my BRCM @ SI?

Post that URL Tinkershaw, my buddie, and informing we will go!


your pal

damon666

who loves Hole by the way...

ps OK, this board needs an official song, any suggestions??
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Damon,

I went back and did a BRCM search. To my total amazement my perception of dissing was a little overstated. Must have been a 3 Mountain Dew Night.

Oh well, always looking for a good excuse to get riled about.

Tinker
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Hello all ::

> Broadcom is a 'hit'. I've certainly pigeon-holed it > into the royalty game, but have been so impressed by > their fundamental numbers and
> growth rate that it has resided in my portfolio > since December of 1998.

A quick question, "How is BRCM in the royalty game ?"

Thank you for the input.

Vasu
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Vasu: I will attempt a quick answer to your quick question.

A quick question, "How is BRCM in the royalty game ?"

Have you read The Gorilla Game book? It is very informative and a must if you plan to invest in high technology. You owe it to yourself and to other posters on this board to do so.

I will attempt to point out a few major points you can look for when you read/re-read the book to help answer your question.

1. Is the company involved in high technology?
2. Does it have proprietary control of an open technology - a technology they control but is open for others to develop products to use with it. (If the answer is YES, then you may have a Gorilla lurking around in the Mist.) This is the Gorilla game.
3. If the answer to #2 is NO, and the company has twice the sales on its nearest competitor, then you may have a King with his feet proped up in his castle. This is called the royalty game.
4. The easiest way for a company to have proprietary control of an open technology is for a dicontinuous innovation technology or a "better way to do something" to exist, i.e., Microsoft software discontinuous innovation technology which showed the world that IBM could tweak their computers to work with "standard" softwares packages instead of vice-versa.

This wasn't very quick, but there is a lot more useful information in the book.

Hope this helps,

/s/
Harold

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Hello ConsultHR ::

Sorry for the confusion but when I read the post, the word "royalty", to me meant IP based revenue stream like RMBS, QCOM etc.

Yes, i understand that BRCM is King, oops royalty :-)

Thank you for the input. I am half way thru the book and liking it.

vasu
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