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No. of Recommendations: 5
Hey Fools,

I started reading the Gorilla Game...finally (thanks to Mike Buckely who sent me a free copy. Free stuff is always welcome : )). Anyway, I am through chapter four of the book. So far, I think it is excellent. I knew I liked it when early on Moore mentions Brian Arthur from the Sante Fe institute, as well as the parallels to ecology. I've recommended before that people read the book Complexity to learn more about Arthur and the theory of increasing returns (other cool stuff too.). So, I suppose Moore thinks along the same lines that I do. What can I say, great minds think alike!!!

The caveats were good as well. The best one, you will leave a lot of money on the table. That's very important to understand b/c there are a lot of psychological issues to deal with when playing these games. Another great one, don't micro-manage the portfolio. Earlier on this board, people asked if the returns would diminish since a lot of people have read the Gorilla Game and will be utilizing its strategy. My answer would be "no". Why? Besides the fact that you actually have to work at trying to find the potential emerging technologies, characterize the technology adoption life cycle, and then follow-through, most people will not be able to avoid micro-managing or deal with the fact that they will leave money on the table. That eliminates many, many people, whether they have read the book or not. Kudos to those that actually follow the strategy.

On the CAP stuff (ch. 4?), I thought it was way to general, and Johnson jips ya a little bit (guess you need to go to Columbia and pay $85,000). They could have done the quantitative take. Not to worry though, I pretty much understand how to calculate CAP now, and I will post it here once I work through a few examples on my own and with my other Foolish friend who has been helping me. If you want to do it on your own, Alfred Rappaport's book called Creating Shareholder Value is where you'll find it. You should spend a lot of time with it however, it you really want to understand.

So, through chapter 4, I had two questions. First, who out there in Fooldom has read Inside the Tornado and Crossing the Chasm, and what do they think in terms of how those resources may put the GG in better context??? I figure I will read Inside the Tornado for the hell of it anyway, b/c my perception is that it discusses the Technology Adoption Life Cycle in depth. And, if you don't understand the TALC pretty well, I think you can get pretty messed up. Second question is, what resources are people using (besides the usually suspects like Red Herring or Upside or even this board) to generate ideas?

Many thanks,

John
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No. of Recommendations: 1
Another great one, don't micro-manage the portfolio. Earlier on this board, people asked if the returns would diminish since a lot of people have read the Gorilla Game and will be utilizing its strategy. My answer would be "no". Why? Besides the fact that you actually have to work at trying to find the potential emerging technologies, characterize the technology adoption life cycle, and then follow-through, most people will not be able to avoid micro-managing or deal with the fact that they will leave money on the table. That eliminates many, many people, whether they have read the book or not. Kudos to those that actually follow the strategy.

This is an excellent point that reminds me of card counting and blackjack. Casinos are scared of card counters even though, in my opinion, they should welcome counters. Why? Two reasons. First, most counters are not as good as they think they are. Sound familiar? Second, most counters over-bet their bankroll and, therefore, are likely to get wiped out due to the normal fluctuations of the game. This also reminds me of investing. How many of us thought we were Masters of the Universe right about early March? Anybody buy companies such as ELON, GMST, etc. even though the strict rules of the Gorilla Game told us not to do so? Anybody buy these or other potential gorillas on margin? In the context of blackjack, counter overconfidence brings more money to the casino than it would get otherwise because most counters are not gamblers and, therefore, would not play blackjack if they did not think that the game could be beaten. In the investment context, I am not sure how these similar behavioral factors play out; i.e., the fact that many investors are unwilling to leave money on the table by playing the Gorilla Game by the rules does not necessarily benefit those Gorilla Gamers who do play by the rules.
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No. of Recommendations: 2
Both Crossing the Chasm and Inside the Tornado are excellent books although more tuned to the companies who are trying to market their technology than investors looking to identify opporunities. If I had to read just one I would choose Inside the Tornado because, as you correctly assumed, it summarizes all the chasm crossing issues.

Several key messages to GG investors:
- You must clearly identify whether a technology/company is in the chasm, in the bowling alley, or inside the tornado (easier said than done)
- Investing before the tornado, and particularly before the chasm, is the domain of VCs
- Once the tornado starts and a potential gorilla is identifed there will be plenty of time to invest because the GG benefits accrue for a very long time

IMHO, not getting too excited about early adoption (pre-tornado) success and determining when and where acutal tornados are forming is the tough part about GG investing. The combined knowledge on this board can help make that task easier and all of us more successful investors in the process.
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No. of Recommendations: 2
Hi SlyAce,

As someone who knows a few folks in Vegas (and actually make money as professional bettors), I can appreciate your analogy. I am not far enough in the book yet to clearly define a Gorilla Game. I think that is the next chapter. But, I do know enough to say that if the stocks you mentioned were not GG candidates, then the folks who bought them were not playing the Gorilla Game. Simple as that. And, if you don't play the game properly, then you are not going to win (you could get lucky though). They were playing a different game for which there is no context (at least, not in the book). The authors state that there may be only 100 stocks of 8,000 that are truly of interest. I would suspect that there are even less, and that is a good thing. If someone plays a different game in the context on the Gorilla Game, and they get their #$%^ handed to them, then they get what they asked for.

So, I do believe that GG's benefit from playing the GG despite what other folks are doing, and that has nothing to do with how many people have read the book. Even the authors could not resist chasing after money left on the table. In the intro., they talk about the pressure placed on them from readers to answer the Internet question. So, they caved in. However, it does not appear to me that this is a Gorilla Game (I peaked a little bit at chapter 12, they call it a Godzilla). Shame on them! My response would have been "this is not a Gorilla Game." Remember, you have to be willing to leave money on the table too. The Internet may be a different game with a different set of rules for which the authors are not experts. And, there could be games like a bio-tech game, which, while bio-tech was soaring, is not a Gorilla Game, even if you could draw parallels. This is just my opinion, however. If you disagree, I can appreciate it b/c disagreements make markets in the first place.

John
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No. of Recommendations: 4
TMF Fuz,

Inside the Tornado is my favorite of the books. In my opinion, it's best to read The Gorilla Game first before moving on to Tornado even though it was written first. Crossing the Chasm is an interesting read, but Tornado wins my recommendation. Why? Because it is an excellent study of how management handles the tornado and what strategies they employ to shape their future. It's nice to look back to see how well Apple actually did adjust and execute in the tornado to ensure their longevity and existence. Plenty of examples throughout the book which, in retrospect, helps us to understand what a gorilla game is all about and why money is left on the table for certain investments.

Some of the terminology in Tornado has been 'refined' in the two GG versions, so you have to read the book with that in mind.

BB


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No. of Recommendations: 1
But, I do know enough to say that if the stocks you mentioned were not GG candidates, then the folks who bought them were not playing the Gorilla Game. Simple as that.

Most would probably agree that GMST and ELON are both candidates waiting for a tornado (this applies with more force to ELON). For example, Moore wrote an e-mail in which he characterized ELON as a gorilla but warned that ELON should not be bought absent the tornado. Despite this warning, some (including yours truly) went ahead and bought ELON even though the "Rules" of the game would not dictate such action.
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No. of Recommendations: 28
Don't get me wrong, you can do much worse than following the principles put forth in The Gorilla Game, but sometimes I just get a bit worried at the, how shall I put it, evangelical tone of some die-hard Gorilla Game followers. One thing I've learned over the years is to never get too far into one single creed or philosphy, religious, political, investing-related. They're always bound to let you down somewhere, as good as they may sound.

Take my case, for example. When I was younger, I used to be a huge fan of Warren Buffett, another person whose developed quite a cult. I shunned techs, and focused on major consumer brands. I did pretty good, actually, as this approached allowed me to catch onto companies such as Wal-Mart, Home Depot, Coke, and a number of other consumer growth stories (I suppose "growth" isn't quite the same once you get into tech). I considered buying AOL, since it fit into a lot of the criteria I used to invest in other companies, but held off due to my Buffeterian philosophy. Learning that a) techs aren't impossible to understand and b) a high P/E doesn't necessarily mean that a company's overvalued proved an expensive lesson indeed, all because I hung onto my adoration of Warren the Great. Unforunately, some still haven't learned the lesson I have, as you'll notice if you go to the Berkeshire Hathaway board here.

I'm sure following "The Gorilla Game" has served many of you well, and if you took a look into my account, you'd be wondering why on earth I'd be criticizing this book, since so many of my holdings are gorilla/king-type plays such as Cisco, EMC, Qualcomm, and JDS Uniphase. However, I also invest in some companies that Gorilla Gamers would shun, such as Exodus (limited barriers to entry) and Conexant (doesn't lead in any of its businesses), and such companies have also proven to be quite rewarding. Very often capitalism can smile upon companies that go against Moore's philosophy, and as much as I agree with many of his beliefs, I try to keep an open mind on the subject, and I think it's in your best interests to do the same.

Great, I'm just done my first post.

Regards,
Mark
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No. of Recommendations: 4
John,

Glad to see that you've already gotten around to cracking Game. I agree with all of your observations. I can't wait to see your stuff about calculating the CAP.

I would add one comment to your thoughts that the book won't lead to diminishing returns. When the first full-fledged recession comes along, many individual investors will stop using their chosen methods of investing including Gorilla-Gaming methods. That will present new opportunities above and beyond those presented by the recession itself. Most professional money managers are so pre-occupied with the short term that they couldn't possibly detract from the long-term benefits of Gorilla Gaming.

On these points I'm putting my money where my keyboard is. My entire portfolio is in high-tech stocks using nothing other than Gorilla Gaming criteria. It appears to be about as volatile as the Rule Breaker portfolio (yep, that volatile!) but I really do believe it's a safer construct. I haven't added a new position to my portfolio in over a year, the last one being Qualcomm when it was added strictly according to the rules of Gorilla Gaming as I understand them.

I haven't taken the time to read Chasm yet because I'm not interested in investing in a product before it has crossed it. I did read Tornado and in ways find it more valuable than Game. Another must-read book in my opinion that is relative to everything about Gorilla Gaming is Christensen's The Innovator's Dilemma.

--Mike Buckley
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No. of Recommendations: 1
Anybody buy companies such as ... GMST, etc. even though the strict rules of the Gorilla Game told us not to do so?

I have what appears to be a unique opinion about that. I've had a "partial" position in Gemstar for 1 1/2 years on the premise that part of the product is an applications technology. For those who disagree and feel that the entire product is enabling, it's still too early to invest. But the tornado may form very, very soon.

--Mike Buckley
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No. of Recommendations: 3
Very often capitalism can smile upon companies that go against Moore's philosophy, and as much as I agree with many of his beliefs, I try to keep an open mind on the subject, and I think it's in your best interests to do the same.

The authors are very clear that there are many ways to make money in the stock market and that Gorilla Gaming is just one of those methods. The reason I especially like Gorilla Gaming is because I don't know of a better risk/reward scenario. I realize that risk and reward are entirely subject to opinion, but when it's my money that's on the line my opinion is pretty darn important. :)

--Mike Buckley

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No. of Recommendations: 5
Mark,

I enjoyed your 'first' post.

I'm sure following "The Gorilla Game" has served many of you well, and if you took a look into my account, you'd be wondering why on earth I'd be criticizing this book, since so many of my holdings are gorilla/king-type plays such as Cisco, EMC, Qualcomm, and JDS Uniphase. However, I also invest in some companies that Gorilla Gamers would shun, such as Exodus (limited barriers to entry) and Conexant (doesn't lead in any of its businesses), and such companies have also proven to be quite rewarding. Very often capitalism can smile upon companies that go against Moore's philosophy, and as much as I agree with many of his beliefs, I try to keep an open mind on the subject, and I think it's in your best interests to do the same.

I certainly am not one to 'shun' investments outside of a confirmed gorilla. You'll find that many gorilla gamers hold other investments. You'll also find that investments in royalty game stocks or godzilla game stocks can indeed reward the investor. CMGI, Dell Computer, America Online and EMC were four of the 5 best returning stocks in the 90's. Cisco was the fifth and the only gorilla of the group. As large as Cisco is, they actually have increasing revenue growth at this point in time for a variety of reasons - all of them good in my opinion.

Regardless, the study of technology adoption life cycles and how the various companies jockey for position within those cycles will continue. Of that, I am quite certain. Hence, there really seems to be no limit going forward in terms of playing the gorilla game within high technology. This doesn't mean we all become complacent with our current confirmed gorillas by any stretch of the imagination. We will always have to have a forward looking vision to the next crop of companies due to the next technology adoption life cycle.

Quite exciting and I think will reward all gorilla gamers for many years.

BB



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No. of Recommendations: 0
Mark said:

<I'm sure following "The Gorilla Game" has served many of you well, and if you took a look into my account, you'd be wondering why on earth I'd be criticizing this book, since so many of my holdings are gorilla/king-type plays such as Cisco, EMC, Qualcomm, and JDS Uniphase. However, I also invest in some companies that Gorilla Gamers would shun, such as Exodus (limited barriers to entry) and Conexant (doesn't lead in any of its businesses), and such companies have also proven to be quite rewarding.>

Very well put Mark. I'm mostly a lurker, but your comment makes me want to say that I find the Gorilla concepts a good start to creating wealth, but at the same time it's okay to invest in other stocks. I'm reading the Gorilla Game too (chapter two now) and have a few stocks many on this board would probably shun. Perhaps after I read the whole book I'll change my mind, but for now, to this end, I will keep my wife's CTAS stock because she works there and it is an a well managed company and I will keep the BAC because it allows diversification into an industry that I don't think is going away.

Regards to all,

Pym
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No. of Recommendations: 5
Forloveofmoney,Your points are well taken. However, I think that investors may choose to follow a multitude of strategies to serve different purposes. I don't think that the authors of the GG ever intimated that you should only invest in Gorillas per the Gorilla Game. In fact, Paul Johnson wrote a Cisco piece of research that characterized Gorillas from other industries (e.g. Wal-Mart), but beware the rules of those games are different.

I own an array of stocks in my portfolio. I own one pure play Internet company as well as some Gorillas (purely by accident, or rather not in the context of following the game since I have only started reading the book), a few indexes, one stock that is probably in the tornado now (lucky me, although I am not sure b/c I am not far along enough in the book to adequately characterize it yet in GG terms), and a few "royalty" players. From my point of view, it is important to recognize then that you may own royalty game stocks, pure play Internets, brick and mortar leaders, etc., as well as Gorillas.

I'll be the last person to get sucked in to just one strategy. But, if I am going to invest in high-tech, it makes sense to have a framework. Is their framework perfect? No, b/c you can/will still lose money. But, if you follow the framework, you are bound to get better and better at identifying the games, and if you are patient, don't micro-manage, and willing to follow the game (as most are not), you have a good chance of being successful. Then, we can sip pina coladas on a beach in Tahiti. As much as I love working at the Fool, Tahiti sounds like even more fun.

As Mike Buckley said, a recession will lead to even better opportunities.

Anyway, no one really answered my important question (in my mind). What sources do you use to track games and stocks beyond say red herring, upside, or this board? It seems to me that in the beginning of the book they had some sort of user group. Does anybody use this? Does anybody read InformationWeek? Any resources...

Thanks,

John Del Vecchio

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No. of Recommendations: 3
TMF Fuz:

Anyway, no one really answered my important question (in my mind). What sources do you use to track games and stocks beyond say red herring, upside, or this board? It seems to me that in the beginning of the book they had some sort of user group. Does anybody use this? Does anybody read InformationWeek? Any resources...

Here's the email address to subscribe to the GG listserv digest:

requests@webcom.com

Put "subscribe gg digest" as the subject line. It's a pretty good source of info.

A great source of GG-related info for next-generation networks can be found at:

http://www.nextgenerationnetworks.com/

Hope you find these helpful,

Jason



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Oh yeah, here's one more. It's the SI GG site which has a list of confirmed gorillas and kings as well as a "watch and wait" list of possible gorilla candidates. Also, the site has a very good message board, although it's a little cumbersome to sort through if you don't pay the subscription fee to SI (you can't post without paying, either).

http://gorillagame.com/


Jason
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Anyway, no one really answered my important question (in my mind). What sources do you use to track games and stocks beyond say red herring, upside, or this board? It seems to me that in the beginning of the book they had some sort of user group. Does anybody use this? Does anybody read InformationWeek? Any resources...

Sources: WSJ, Redherring, Fool.com, SI and the WEB.

Fool on,

Joel
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John,

Anyway, no one really answered my important question (in my mind). What sources do you use to track games and stocks beyond say red herring, upside, or this board?

As a staunch supporter of the Motley Fool, I'm unwilling to publicly recommend a competitor's folder. You'll have to uee you're imagination or get someone else to tell you about it. :)

Other than the unnamed folder, I should have mentioned that I follow CNET news and thing Red Herring is so good that I save copies.

--Mike Buckley
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Take my case, for example. When I was younger, I used to be a huge fan of Warren Buffett, another person whose developed quite a cult. I shunned techs, and focused on major consumer brands. I did pretty good, actually, as this approached allowed me to catch onto companies such as Wal-Mart, Home Depot, Coke, and a number of other consumer growth stories.....
Learning that a) techs aren't impossible to
understand and b) a high P/E doesn't necessarily mean that a company's overvalued proved an expensive lesson indeed, all because I hung onto my adoration of Warren the Great. Unforunately, some still haven't learned the lesson I have, as you'll notice if you go to the Berkeshire Hathaway board here.


Great first post Mark. Please do so more often.

I started out as a pure tech investor (and mechanical investor) and am slowly becoming more of a Buffet follower.

I'm not a believer in buying great companies w/o regard to price (valuation). As the books which theorize Buffet's methods theorize, he believed price to be a huge determinant for purchasing or not purchasing.

In a nutshell (or so it is purpoted) Buffet followed a group of companies (mostly consumer monopoly types) with a history of strong PREDICTABLE earnings. He would wait until the price fell ridiculously low for one of them, and then he would come in buying. I get the idea Warren Buffet bought a lot of shares during market crashes.

I've become very concerned regarding valuation with tech companies, and now choose only to invest in those who I feel still have strong price growth ahead of them over the next 5 years. I would NOT have bought QCOM at 200 today, for instance. But the upper 90s looks quite compelling.

The difficulty in applying Buffetology to tech investing comes with earnings predictability. Past performance of earnings means very little to future growth for many of these companies. So the best we can do is hypothesize regarding growth and throw a valuation multiple at it X number of years out. Then we can decide if said purchase is worthy...ie will it make us mucho dinero.

Nirvana lies somewhere between Buffetology, The Gorilla
Game, and Mechanical Trading. Hope I find it someday!

Take care
Dan


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Dan,

Great first post Mark. Please do so more often.

?? How can he have first posts more often? Other boards? <g,d,rlh>

But the upper 90s looks quite compelling.

Sure does. I bought at 116 and it is just killing me to avoid buying more at recent "fire sale" prices. I've got a sign that hangs in front of my face from a stick woven into my hair: "Remember Steve, you're building a house. Free cash flow is almighty. Thou shalt not buy any more stocks until the house is done."

Steve K
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No. of Recommendations: 8
Great first post Mark. Please do so more often.

Thanks. I intend to.

I've become very concerned regarding valuation with tech companies, and now choose only to invest in those who I feel still have strong price growth ahead of them over the next 5 years. I would NOT have bought QCOM at 200 today, for instance. But the upper 90s looks quite compelling.

I wouldn't have bought the almighty Q at 200 either, but simply because there's much more compelling investment opportunities in the tech sector. On the other hand, if I was forced to choose between buying Qualcomm at 200 and GE (I'm just putting out the name of a respectable, stable old economy copmpany) at its current trading price, but on the grounds that I have to hold onto my investment for five years, I'd pick Irwin Jacobs' company over Jack Welch's without blinking.

In the end, while there have to be limits to valuations, what matters is future cash flows rather than P/E ratios (something I picked up from my old mentor Warren). To see this explained more intricately, read the following post on the Cisco boards, which I'm sure some of you have read already:

http://boards.fool.com/Message.asp?id=1080142003750000

In the case of Qualcomm vs. GE, even though I obviously have to factor in more risk for the former and even though I chose to price it at $145 billion (what it was worth at $200), I think there's a better chance of Qualcomm, with its potential to have 50%+ operating margins, having a future cash flow/valuation ratio higher than that of GE, which is currently worth $516 billion.

The difficulty in applying Buffetology to tech investing comes with earnings predictability. Past performance of earnings means very little to future growth for many of these companies.

I see where you're going with this, and I agree with you partially. Your argument is the main reason tech companies need more risk factored into their future cash flow estimates. However, there are some tech companies that prove an exception to this. This article deals squarely with the issue:

http://www.tsrec.com/buffett-tech.html

The author argues that while "technology-related techs" such as Qualcomm and Cisco should be avoided by Buffett fans, "consumer techs" such as Nokia and Yahoo! fit well into Buffett's principles on stability and the ability to clearly map a company's future, and thus shouldn't be avoided by investors looking for a certain degree of safety. I definitely agree with the latter argument, but only partially with the former, as there are technology companies dealing in the world of arcane computer science terminology and intellectual property lawsuits that offer a similar amount of security.

These companies do so in one of two ways. One group creates such a safety net by attaining something akin to Gorilla status in the businesses they happen to be in. Examples include Microsoft, Gemstar's IPG business, and Qualcomm's CDMA licensing division. This scenario is something I'm sure all of you are familiar with, so I won't get into the details.

The second group of companies can guarantee safety simply through the strength of their management, and the quality of their employees. A perfect example of this is Qualcomm's CDMA ASIC division. While Qualcomm rules this arena, it by no means has Gorilla status. Theoretically, a startup with some engineers skilled at working with CDMA could come up with a better mousetrap. However, I think there's little or no chance of that happening. This is due to the fact that Qualcomm pioneered the commercial use of CDMA, and thus amassed a collection of engineers whose expertise is not only unrivaled in the industry, but many of which have had the luxury of working with the technology for over a decade. Combinine that with a management team that's done all that it can to build the value of this business by striking the necessary deals to provide things such as MP3 support, Bluetooth integration, streaming video management, and robust flash memory access, and you can see why I'm just as confident about the future success of Qualcomm's ASIC division, at least for the next few years, as I once was with companies such as Coke and Home Depot (and as Coke's shown, even consumer-oriented companies with great brands can let you down).

That's about it for now. I promised my girlfriend that I'd take her rafting tomorrow, and if I tell her that I can't make it because I'm too tired from writing a post on an internet message board at 3:00 A.M., I don't think she'll be too happy about it :-).

Regards,
Mark
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Nirvana lies somewhere between Buffetology, The Gorilla
Game, and Mechanical Trading. Hope I find it someday!

Take care
Dan


Interesting how many of our favorite gorilla and king technology stocks appear on the MI screens. It reads like a "who's who" list these days. <ggg>

BB
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No. of Recommendations: 3
Hey Mike Buckley,

It's okay to suggest a competitor. The Web is the best of the free market. I read James Cramer in his New York Magazine articles each week (Thanks to Bob, one of our other analysts). OK, if I get fired on Monday for saying that I actually like Cramer, then you know once and for all there is a party line at the Fool. There's not, and I plan to be here long after Monday (Tuesday?).

I read Red Herring, and I save them too. A great magazine. I like Industry Standard too. I saw in the book that they recommended InformationWeek. I'll have to take a peak at that. Plus, I suppose I'll venture over to SI to see what they have, and get on the user group mailing list to get "in the game."

You could still recommend the folder privately too.

Best,

John Del Vecchio
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No. of Recommendations: 1
Hey Fuz,

I've been reading this thread with interest, thanks to all for a high-quality discussion. Like you, I'm also in the throes of reading the book (going over the case studies now). For what it's worth, here's what I read regularly:

* Fast Company
* Information Week
* eWeek (formerly PC Week)
* InfoWorld
* The Industry Standard

I have to admit that I don't generally read these mags for investment ideas. Rather, it's my job to do so -- I'm a PR consultant (yep, a flack) for high tech companies. I use news from the above books to help me round out investment ideas I've developed through research on the Fool, etc.

Also, while I don't read it regularly, I like Business 2.0. For those interested, the Fool is profiled in the May issue of Biz 2.0. Check out pages 222-234.

Keep 'em flying,

Tim
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On the other hand, if I was forced to choose between buying Qualcomm at 200 and GE (I'm just putting out the name of a respectable, stable old economy company) at its current trading price, but on the grounds that I
have to hold onto my investment for five years, I'd pick Irwin Jacobs' company over Jack Welch's without blinking.


Thanks for the reply Mark. I completely agree with your assessment of GE vs QCOM. I'm looking a lot at great companies these days, trying to find bargain basement prices. I've found some. GE isn't one of them...I just cannot justify their metrics no matter how I add things up. One thing to keep in mind is they are partnering with American Superconductor and will therefor be part of the Powerchip revolution.

Another great company with a Goofy price (pun intended) is Disney. Can you believe Disney and Qualcomm trade at a very comparable P/E despite huge differences in growth rate and cash:debt? So much for the efficient market theory. Disney happens to be my favorite company in the world, and if I had a choice I'd spend my days at WDW. So you can imagine how much I would love to own shares in Disney. But it just doesn't make sense as a business decision. However I DO like the price of Lowes, which is one of my favorite stores.

Well this is getting off topic. Feel free to email me if you want to discuss Buffet like value plays. And I welcome your valuation analyses of Gorillas and Kings if you care to share them with the board on occasion.

DP
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No. of Recommendations: 1
The question is when you bought.
There are disputes about CREE GMST RMBS etc etc etc
Those that bought early did very very well.

Why not buy RMBS at 90 when Intel reconfirms commitment to technology
Why not buy CREE when patent protection of SiC and profit is shown?
Etc Etc.
IMHO RMBS is in a tornado.
Those that bought after the tornado was sighted did poorly indeed.

Let's take a look.
===================
Buy RMBS on Jan 1
Buy CREE on Jan 1
Buy LHSP on Jan 1
Buy ELON on Jan 1
Buy GMST on Jan 1
===================
Buy QCOM on Jan 1
Buy INTC on Jan 1
Buy CSCO on Jan 1
Buy JDSU on Jan 1
Buy NTAP on Jan 1

Hold througout
Who did better???

Check back in a year and even though I do not believe in ELON I strongly bet on the first group.

I respect the bible BUT too much is too much!
The nature of the game has changed IMHO.
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No. of Recommendations: 3
mishedlo wrote:

Let's take a look.
===================
Buy RMBS on Jan 1
Buy CREE on Jan 1
Buy LHSP on Jan 1
Buy ELON on Jan 1
Buy GMST on Jan 1
===================
Buy QCOM on Jan 1
Buy INTC on Jan 1
Buy CSCO on Jan 1
Buy JDSU on Jan 1
Buy NTAP on Jan 1

Hold througout
Who did better???

Check back in a year and even though I do not believe in ELON I strongly bet on the first group.

I respect the bible BUT too much is too much! The nature of the game has changed IMHO.


Best of luck buying shares of any company on January 1. <ggg>

Whether we use the time frame of seeing which stocks did better YTD or as you suggest 'check back in a year' - they both qualify as short term time frames for gorilla gaming. I would rather check back in many years to draw any concrete affirmative conclusions. It takes time to accumulate wealth and any attempt to try and condense that process takes on the kind of risk that moves one out of investing and into gambling.

I happen to like the prospects for both groups of companies you listed above over the next several years. Could you explain how you view the nature of the game has changed in your opinion?

BB


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Bruce's comment on holding periods.

Whether we use the time frame of seeing which stocks did better YTD or as you suggest 
'check back in a year' - they both qualify as short term time frames for gorilla gaming. 
I would rather check back in many years to draw any concrete affirmative conclusions.

FWIW 

Stock    12/31/99 Close   01/04/99 Close    Splits
RMBS     67-7/16          96-3/8
CREE     85-3/8           45-1/4            08/02/99
LHSP     56-1/16          28(3/22/99)
ELON     19-9/16           4
GMST     71-1/4           60-5/16(2/18/99)  05/17/99, 12/14/99

QCOM    176-1/8           55-7/16           05/11/99, 12/31/99
INTC     82-5/16         120-13/16          04/12/99
CSCO    107-18            95-5/16           06/22/99
JDSU    161-5/16         173-7/8            07/27/99, 12/30/99
NTAP     83-1/16          45                12/21/99

Hope all figures are correct.
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By the nature of the game changing, I meant on when to buy.

The strategy I like right now is to pick strong companies that already have earnings, that have patent protection, a lock or likely lock on a huge market, open/proprietary architecture, where a tornado is PROBABLE sometime in the future, instead of already sighted.

On a risk/reward basis - depending upon the value of one's portfolio and ones goals, it may just be better to invest ahead of the tornado.

RMBS was not in a tornado in January
ELON was not in a tornado in January
etc. etc.

I believe that Rambus is in a tornado now, although I suppose for it to be official we need to see the next earnings. Of course many things can happen by then:
there could be problems, lawsuit disaster with Hitachi, but the same could be said of GMST if Time Warner situation does not resolve itself properly.

In fact many many things can go wrong with about anything, but as INTEL has shown - the market will grant much more leeway with errors in a more mature Gorilla. That said, in this bear market, would a negative CSCO surprise have been taken lightly? I think not.

From a SAFETY standpoint, one would not invest in Rambus until after the Hitachi thing is settled (or at least until the ROT hearing in June), and until the next quarters earnings. RMBS might be back to 400 by then OR it might be at 80. The worst time to buy was after a huge runup, yet ahead of the tornado sighting.

Thus: maybe a good strategy is to be reasonably early, ahead of major runups, or be patient for the tornado, BUT NOT TO GET CAUGHT IN NO MAN's land, like RMBS at 400 or ELON at 88.



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"RMBS
might be back to 400 by then OR it might be at 80. "

probably closer to $80 due to the 4:1 stock split :)
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Hi tbeyers,
You wrote:
Also, while I don't read it regularly, I like Business 2.0. For those interested, the Fool is profiled in the May issue of Biz 2.0. Check out pages 222-234.

I read the article the other day. I noticed a quote in there by a Wall St. analyst regarding folks doing their own research (and even selling it for a few shekels). It applies to Fools in general too.

Eric Schmidt, a biotechnology analyst who works from S.G. Cowan's New York and Boston offices and who follows companies including Celera, is glad to tackle that question: "Lay people are lay people for a reason," he says. "The Internet can be a good forum for stock-picking....But long-term the world still belongs to institutional investors and the professionals in my community."

Wow! Where has this guy been? I think he's been stuck in a skyscraper so long that he missed the last five years while suffering from vertigo. One of the great proponents of the individual movement has been Jim Cramer. Despite his woes with thestreet.com's stock price, I will guarantee you that Jimbo is a hell of a lot more perceptive than Eric Schmidt.

Best,

John
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Eric Schmidt can go to hell!

KUDOS to everyone else on these boards.
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If it hits 400 after the split I would have long bailed out and retired!

ggggg
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Bruce,

Can you tell me where in the game LHSP is?
They seem to be knocking down a few pins lately, but I am not sure this technology has really crossed the chasm.

Where are we and what is your prognosis for this diamond in the rough.
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/i Thus: maybe a good strategy is to be reasonably early, ahead of major runups, or be patient for the tornado, BUT NOT TO GET CAUGHT IN NO
MAN's land, like RMBS at 400 or ELON at 88.While I'm in agreement with LTBH about the relative importance of timing, your statement about not chasing a big runner before tornado makes sense, as I remember my ELON at 80 purchase. i/
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Worse yet
How about buying at 88 and selling at 33 thinking it was dead money.
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TMF Fuz: Following my re-read of the GG book, I appreciated your comments On the CAP stuff (ch. 4?), I thought it was way to general, and Johnson jips ya a little bit (guess you need to go to Columbia and pay $85,000).

Following the review of my notes on Warren Buffett's approach, Mike Buckley pretty well summed up his approach in an earlier post - to wit, present value of future earnings and buying at a discount to present value. Because of the two stage present value model Buffett is said to use, CAP is artificially constrained to 10 years maximum. Maybe this is not a bad idea, but it certainly begs any quantitative analysis of CAP.

I look forward to your future posting how to calculate CAP now, and I will post it here once I work through a few examples on my own and with my other Foolish friend who has been helping me.

Thanks for you reference to Alfred Rappaport's book called Creating Shareholder Value.

Harold
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Can you tell me where in the game LHSP is?

They seem to be knocking down a few pins lately, but I am not sure this technology has really crossed the chasm.


There are certainly opposing views on this. If you treat it like an application software vendor, then the time to buy is indeed in the bowling alley. I tended to think this way with Lernout & Hauspie back in early 1999 and added a few shares. I say few because that is all I own and have not added any more shares to date. The application software vendor game, using other segments for parallel study, don't require that Lernout & Hauspie own the entire market in order to be successful. A gorilla/chimp relationship or a gorilla/2 chimps relationship can survive well. That's on the surface.

Another aspect is that many have argued the point they don't see a disruptive technology in speech recognition products. I cannot ignore the valuable points made from both sides of the argument. Yet, Lernout & Hauspie continues to position themselves and their technology in a basket of emerging technologies that appear to have the opportunity to create a value chain formation or two which could lead to a real convincing tornado. How large that market is and what the results will be remain to be seen. For this reason, I find too many other more compelling investments that have attracted the majority of my investment money. However, don't take my word on it as I really don't spend too much time studying the space these days outside of the recent consolidation. Others study it quite well and would be able to offer a much better opinion in the speech recognition game.

BB

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