Alright, in case you missed it, here's my final list of the ten stocks that will dominate the world (including spelling corrections ;-)(For criteria, see post 1649)Cree (CREE)Gemstar (GMST)Network Appliances (NTAP)JDS Uniphase (JDSU)Celera (CRA)Siebel Systems (SEBL)Broadcom (BRCM)Qualcomm (QCOM)Echelon (ELON)Redback Networks (RBAK)Note:Ballard Power (BLDP) and Lernout & Hauspie (LHSP) have been removed due to the present uncertainty of their acceptance into the market place.Any final comments before I close up the books and start the hardcore research?Krash
I think you are somewhat remiss in not including CMGI, as it is poised to be the premiere internet company coming up. Here are an excellent series of posts by Phileo that do an excellent job trying to ascertain CMGI's ever-nebulous value. The valuation numbers provide a very convincing argument as to CMGI's stake in the whole internet scheme of things.Part Ihttp://boards.fool.com/Message.asp?id=1080158007501000&sort=idPart IIhttp://boards.fool.com/Message.asp?id=1080158007502000&sort=idPart IIIhttp://boards.fool.com/Message.asp?id=1080158007516000&sort=iddisclosure: phil is waiting to re-enter CMGIphil.
KrashJust a lurker here, but I have RTFM and feel that you might be remiss in not considering a stint in the ARMHY. Proprietary technology, high switching costs, near the eye of numerous tornados coupled with visionary management. What do you got? An ARMED Gorilla.crash
CrashI used to own ARMHY, and if you check the original post, it was one of the options I listed. I thought it would be a great investment as well since their chips are inside the majority of wireless devices. I love IP companies like Rambus, Qualcomm and Arm Holding. Unfortunately I've been unable to find many people on the Gorilla Game boards who are big fans of it, Analysts don't seem to hold it in high regard and the stock has been sitting in the tank for the last couple of months. If you could provide me with some further information on the company's long term prospects and its gorilla characteristics I would definitely consider adding it to the list.Krash
philI own CMGI in my own portfolio and had it as one of my options in the original message. I think it's a great company and I hope it continues to perform as it has in the past. That said, I was reluctant to add it to the list because I don't see any market where they're the clear leader. They have their tentacles in all sorts of areas (ie. B2B, Advertising, Portals, etc...) but I don't see them leading any of these. Commerce One, Oracle and Ariba seem to have the vast majority of the B2B business while Doubliclick owns the advertising space and Yahoo dominates the portals. I'll hold onto my CMGI but it doesn't quite fit the bill for the list I'm building now.Thanks for the thoughtsKrashNote: There are many great companies that I had to leave off the list, in order to maximize the probablity of choosing emerging companies that will still dominate in ten years I had to take only those that were already establishing their leading positions in rapidly growing markets and had a strong lead on the competition.
Not knowing better at the time, I too previously recommended CMGI. After realizing that posters to this board (such as Bruce Brown) are extremely knowledgable and being informed that CMGI is not a Gorilla, I repented and did three things: (1) I sold CMGI (incidentally, CDO may be a better buy if you like this sort of thing), (2) I went over the book and am trying to sleep on it (incidentally, I have come to like the vivid metaphors which actually give a better "feel" of what the stock is like), and (3) I bought certified gorillas Siebel Systems (SEBL) and Gemstar (GMST). I hope "Ten stocks to rule the world" becomes a regular and recurring feature of this board which is extremely valuable to all. Thank you.
I've been thinking a bit more about the Gorilla Candidate and I have to conclude GMST is not a Gorilla Candidate. It is a Gorilla. The assessment seemed obvious as I was responding to an e-mail regarding a recent RMBS critique, basically just clarifying to the person that its on the risk par of a CREE in my book now. A Gorilla Candidate. And I was going to list GMST along with CREE, but GMST clearly has such a large lock on its market (and revenues aside) the physical evidence of distribution screams tornado, supported by recent evidence of increased major, national sponsorship, that GMST is a safer investment than a mere "Gorilla Candidate." That point seemed obvious in comparison to CREE or RMBS or NTAP who each have less lock on their markets.Anyone disagree? Is GMST not clearly a Gorilla even if RMBS and CREE, NTAP, ELON are still candidates at this point?Tinker
CMGI: They have their tentacles in all sorts of areas I think you called it right--CMGI is an octopus not a gorilla.
Interesting list, but I disagree with removing LHSP. It may be early in the game, but SR technology is going to be commonplace in ten years (or less) and they are the leader. Why is LHSP based in Belgium? Answer: It is one of the most multilingual countries in the world.JMHODon
Okay - here is a "guaranteed" prediction. At least one (probably more) of the Ten Stocks that Rule the World in ten years is a name we have never heard of. It is currently selling at $1.50 on an obscure exchange. An investment of $1000 now and you will be a millionaire in ten years! --- Of course, I don't know which one of the thousands of alternatives it is. Sure wish I did!!Don
Tinker,I've got dome loaded questions. Beware. :)I have to conclude GMST is not a Gorilla Candidate. It is a Gorilla. I assume you're referring to the EPG/IPG space, not the VCR technology. Right?All Gorillas come from tornados. Your conclusion that Gemstar is a Gorilla requires that a tornado formed. When did the tornado begin? Did it end or is it ongoing? What are you measuring to determine the existence of the tornado?--Mike Buckley
LOL!!kenora!!!!PREDICT OFTEN!!!....you'll be right sooner or later!knee
Mike Buckley:If, or after Tinker replies....wish you would answer your own questions....which should answer some nagging ones of mine as well.Tornado formation is a real obstacle for me to overcome for all the "obvious reasons". Having said that, it seems to turn on the E-word..earnings. Not to mention quantifying the dimensions of the earnings as well as the optimum observation interval of successive quarters of such hypergrowth.Assuming all other criteria are in place this should be easier than it seems to be for me. But, alas it's never that easy. Please comment on your guidelines re' your time interval before entry and whether earnings above 50% is the bright line?Seems to me a lot of my confusion, and perhaps that of others as well, (not referring to Tinker of course), occurs when any given company: suddenly, enjoys hypergrowth earnings for several quarters, with perhaps , even some proprietary technology....then becomes classified as a Gorilla, emerging-G, G-candidate, G-in the mist, etc. The usage of these newer categories becomes a confusing matter of semantics for me personally. It appears equally obvious the valuations for many such "undesignated" co.s with rapid growth become substantially discounted by the market in what I perceive to be premature fashion. Makes for a bit of a chaotic challenge to really follow the principles of "The Gorilla Game".Becomes a "tisket..a tasket..a bright yellow basket" instead of the intended basket protocol.I appreciate your ongoing efforts greatly, keith
Okay - here is a "guaranteed" prediction. At least one (probably more) of the Ten Stocks that Rule the World in ten years is a name we have never heard of. It is currently selling at $1.50 on an obscure exchange. An investment of $1000 now and you will be a millionaire in ten years! --- Of course, I don't know which one of the thousands of alternatives it is. Sure wish I did!!Don-------------------------------------------------------For my girlfriend's sake, I hope it is LITH, trading at around $1.50/share.She will not let me sell it, ever since I told her she could have 1/2 the profits it makes over the original investment.It is a small position, bought on an inaccurate newswire from the company. A retraction was made the next day, saying basically "whoever made this wire and said he was our CEO, really was not....He does not even work for us....Whoops....Sorry 'bout that."Man, I was POed about that.But it taught me a lesson about researching my investments BEFORE buying them.(not quite as dramatic as the guy who lost everything on margin in CRA, but if you all want to give me 10 million recommendations, that is fine by me!)Callante (LITH = next CSCO???????)>>>>>Fingers crossed!<<<<<<
Y2K, If these are you final selections I think you've got great portfolio. However, I personally would have trouble taking BLDP off my list. I own all the stocks on your list except NTAP, SEBL, BRCM and LHSP. If I were to predict one stock I would still own 15 to 20 years from now it would be BLDP. This is based on my confidence that we will transition to a hydrogen based economy. I also believe BLDP is less susceptible to a discontinuous innovation displacing their technology than nearly all other investments on your list. Just my opinion. Just as an investment in CRA requires faith in the future of biotechnology. Other questions to ask yourself: can CSCO use its muscle to unseat RBAK's early lead? Will INTC use its gorilla power to unseat BRCM? Will ELON's market really tornado as all the futurists are predicting? Will CREE end up with far more competion than many think? Will the GMST's merger with TV Guide be approved? Will MOT and NOK catch up to QCOM in CDMA technology? When I ask myself these questions and and assign qualitative probabilities as to each companies potential dominance BLDP stacks (ha) up pretty well. I also like Tinker's use of the term Gorilla Candidate. I believe it is appropriate given todays market conditons. Companies are being given gorilla like valuations before they tornado. Many of us obviously believe in investing in enabling technology companies in the bowling alley rather than after demonstrated hypergrowth. This also means accepting more risk than following a pure GG strategy. But I also believe it offers the best chance of maximizing potential returns. It also requires greater diversification than traditional GG investing.I also like to ask myself the following questions:Is strict religious adherence to pure GG strategy the right appoach based on companies being valued on a price/vision and price/sales basis rather than price/sales and P/E basis? GMST may not be a gorilla in a pure sense, but what conditions will prevent it from becoming a gorilla? This helps me sort out the percent of my portfolio to invest. Maybe we need sub categories for gorilla candidates like Strong and Weak (stupid?). SAP may be a gorilla in the ERP space, but do I really want to invest in a company whose manufacturing implementations are mostly crap(IMO)and use 25 year old technology (MRPII)? Reading the GG book has made me ten times the investor I was previously. It has given me a framework for understanding the kind of companies in which I want to invest. It keeps me focused by eliminating 99.9% of all public companies from my radar screen, except a few Kings, Godzillas and Biotechs I like. Enuff said.
Keith,The authors are very clear that the tornado is measured by revenue, not earnings. The reason earnings aren't the proper gauge is because earnings are subject to other issues that have absolutely nothing to do with product adoption. Earnings can be impacted by changes in R&D spending and other costs of doing business, changes in income tax rates, and sales and acquisitions of businesses. If you're thinking of earnings per share, that can be affected by all the above as well as increased or decreased shares outstanding. Because the tornado is a symptom of product adoption, the only way to measure the rate at which it is being adopted is to measure the rate at which customers are paying for it. That's revenue.Though the authors are clear that revenue is what we use to determine the existence of a tornado, they aren't aren't clear about what rate revenue growth is clearly that of a tornado. Anything in the range of 100% annual growth or more is a reason to examine the possibility of a tornado. At the extreme, sequential quarterly growth of 30% or 40% is a clear sign the tornado is in progress.Based on your thinking that the tornado is all about earnings, I think it would probably be helpful for you to revisit the discussion in the book of tornados, what they are about, and how they are measured. During the tornado, a company conentrates on increasing market share (revenue), not margins (earnings). It's after the tornado ends that a company concentrates on increasing margins.I'll wait to hear from Tinker before I give you my thoughts on Gemstar. After all, I'm open minded to the possibility that he might change my mind. :)--Mike Buckley
If I were to predict one stock I would still own 15 to 20 years from now it would be BLDP. This is based on my confidence that we will transition to a hydrogen based economy. I also believe BLDP is less susceptible to a discontinuous innovation displacing their technology than nearly all other investments on your list. Just my opinion. Just as an investment in CRA requires faith in the future of biotechnology.Ballard? How many years before i can buy a car with a hydrogen combustion engine? Have they made a car with a hydrogen engine that doesn't make a load noise? What's the mileage (i'd guess it's better than gas, but i'd like know.)Will the car explode if i crash and am using a hydrogen engine?Ya, BLDP might be less susceptible to a discontinuous innovation displacing their technology, but will BLDP technology even make it to the market place? Gemstar is in the stores right now! Gemstar has a virtual monopoly on EPGs.I rather bet on a company that has a product out now and is about to tornado than some company that is years away from tornadoing. Just my opinion.Have Ford and GM say this technology will replace gasoline engines? What are their feelings? I'd guess Ford would be pretty optimistic cause they have an investment in Ballard.And if you don't mind, explain why PLUG couldn't enter the same field Ballard is in.note: i've not done much research on fuel cells so forgive me if my opinion on fuel cell technology is way off. It's just i was given the impression that this technology is 2-3 years away from a product hitting the market.
GMST may not be a gorilla in a pure senseI haven't had the chance to go check out any figures. So this will be a short post from memory. But if I recall advertising revenues from the guides (both EPG and IPG) grew sequentially by 60% last quarter. True this is off a small base, but Tornadic. Recent first hand reports from the GMST indicate 4 or was that upgraded to 5 (can't recall now) new national sponsorships on the guides.Clearly the signs of advertising revenue ramping exponentially are there.In addition the guides are being found in sets with prices as low as $199 with 19 inch screens. The product is moving away from high-end early adopter products into ubiquitous distribution in all televisions or close thereof. As with Yahoo! advertising revenue ramp will trail the actual Tornado. Advertising follows eyeballs, it does not precede eyeballs. I believe this will occur with GMST.In addition, although the manual refers to revenues, I have found that with the biggest of Gorillas revenues are not the key sign of the Tornado. It is the action in the markets. With Q for example the rapid acceleration of CDMA adoption. Said revenue acceleration is even today hardly recognizable except by the most ardent of Q followers who cut through to sequential licensing revenue growth. Something seemingly ignored by the Street.Also, I had an interview with a very well financed Internet start-up this week. One of the key means of obtaining ubiquituous distribution for their product will be eBooks and synergies available with GMST's couponing patents (at least if I have my way in regards).GMST is at the center of the incremental revenue oppty's this company will provide. And I am sure this company is not alone in providing said opportunities for GMST. I'll have to get some more solid facts for a more thorough and thought out post, but the sequential ad growth is there, reports of increased national advertisers are in place, and the guide is being shipped in lower and lower priced televisions. This distribution will only accelerate as digital set-top boxes start hitting the masses shortly.And in addition to this, another element of a Gorilla is the relative safety of the investment. I do feel that GMST's position in the market and the growth that is visible by the above evidence (said growth which will be accelerated by the TV Guide merger - report later) makes GMST as safe a purchase as any Gorilla out there. I don't see anyone coming in (outside of a government antitrust suit) and knocking GMST out of their dominant position in the market. RMBS can still be knocked for a loop, CREE's technology, at least in lighting, is always in danger of discontinuous innovation, but GMST owns its markets, and with the eBooks purchase has only increased its addressable market.In my book the Gorilla Candidate becomes the Gorilla when not only is their a foreseeable Tornado but also when the investment reaches a new level of relative safety (as no investment is safe, all companies, including Gorillas can fall big time) which a "Gorilla Candidate" just cannot provide.Tinker
"Because the tornado is a symptom of product adoption, the only way to measure the rate at which it is being adopted is to measure the rate at which customers are paying for it. That's revenue."Mike, your above post has me thinking. Is the above scenario also a microcosm of the status of the NASDAQ? If we viewed the NASDAQ as a huge company, I think we could agree that it is tornadoing. Using Moore's "Technology Adoption Life Cycle", the innovators, early adopters, and early majority are likely already investing. If we monitored quarterly net investment into the NASDAQ as a company's revenue, we would be able to tell if the tornado is still going strong or weakening, no? Out of curiosity, where would I get information on the NASDAQ net investment figures? Any idea?This is my first post on the MF Boards, and I apologize if I'm rambling abit. I guess I just never thought of using Moore's paradigm to explain the bigger picture of the NASDAQ as a whole before. Thank you for the insight that you share on this board and the SI Board. Ditto to Bruce Brown. I've learned alot and hope to continue in this regard. Aloha.
Tinker,Would you be willing to classify the reveues that Gemstar derives from the advertising as in a gorilla game or a godzilla game?This is an important distinction to make as we review Gemstar and the multi-faceted games that it is involved in when trying to place the logistics of tornado activity.BB
Mike:Aw, of course! You're absolutely correct. My occasional dyslectic mind cramps and I misspeak. Lots of difference between "profit" and "cash flow". I should have been more careful. Last year, on a part time basis I "built out" some townhouses my brother and some partners had problems with 4 years ago and shut it down for 2 years until the recent mkt. boom began. I had a "very clear and bright" understanding after I finished---having begun with a "fundamental" picture from prior experience with the same game 10-15 years earlier. Same principle in any business. Thankfully, we made made a very nice and reasonable (10%) profit and recovered all the prior losses the other partners suffered. Now got to pay the taxes! Argggggg!!!!Presumably one could just substitute the word revenue for each time I wrote profit in the post and the concepts I asked you to "task" would be acceptable.Many thanx for your review and thoughts. I mostly just read on this board, venturing to ask a few occasional questions....mostly for clarification. Seems to me the concepts of the "field manual" are becoming a "tornadic" microcosym within and of themselves. I am almost certain the book sales are as well. Finally, I keep waking up thinking about the difficulties we all face in the swift acceleration in "future cash discounting" which is seen in the valuations of co.s lacking various and sometimes seriously critical characteristics to be considered "candidates". So much for risk issues!! No one wants to miss the early train!! FUD and greed are surely a handicap!!!! When all is said and done tho', I remain convinced the basic "risk/return" principles of the Game are fundamently correct beyond doubt. Only need a glance at Cisco and Oracle and INTC!taking coals to Newcastle,nuff said, Keith
techreports:you questioned:"And if you don't mind, explain why PLUG couldn't enter the same field Ballard is in."They are essentially using identical PEM technology and IMHO are therefore directly competitive. If interested you may review the informative co. web at:http:www.plugpower.com/news/view-Article.cfm?id=41(have BLDP:watching PLUG)Both co.s have recently completed exhaustive trial test in conjunction with auto mfg. and local and state govt.s as well as similar joint efforts in Canada and Europe. Refer to "recent news" on their respective web pages. I have not analyzed the comparative financials between the two co.s but intend to do so as time permits. I have the impression, PLUG is perhaps slightly ahead in revenues. Some of this analysis requires an understanding of the various govt. grants and funding, etc.I am not aware of any activity by PLUG in the wireless telecom. field. BLDP's tech in the field was my chief reason for investing in that co.--in an effort to play this game at the infrastructure level rather in such "edge" co.s as PALM, or for that matter MOT, Nokia, etc. For my purposes, this is at the least an execution-game, if not a Royal game as well. Not that the Royal game co.s are to be disregarded. On the other hand, I have enough of them already by default, having aquired them prior to understanding the Gorilla Game principles.Well, this became longer than intended, so I'll leave off any link to BLDP and their dd stuff. Hope this helped. PLUG will answer your questions about explosive risks, etc.poweringoff, knee
Tinker:You're about to convince me!! Stop already!! Will have to sell something to move over for GMST!!!! Hate to sell!!!!! Always wrong.....virtually every time!!!loltaking an alka selzer,knee
Akoni:I believe both logically and by observation of the market (chiefly NAS) your comment has merit. How come? Cause I have been tossing and turning over the paradigm for several months. The "curve" should be just as applicable to not only the NAS but even to the sales of "The Gorilla Game" itself. Would hazard the guess it's on main street as we post.This was my chief aim in my post to Mike Buckley a few posts back but tripped over my words by using "profit" incorrectly when I should have said "revenues". Tinker has posted some thoughts about this subject in this thread.I'm going to print yours and Tinker's as well to reread again and roll it over in my mind. However, I suspect the authors will have some observations to this effect...sooner or later. I expect the most likely reason to prompt them to do so will be the incorrect and/or inaccurate application of principles as people continue to see "herds of gorillas" and escalate "discounted earnings" with ever more astounding valuations.slightly underwater in this terrain, knee
Tinker and all,In my book the Gorilla Candidate becomes the Gorilla when not only is their a foreseeable Tornado but also when the investment reaches a new level of relative safety (as no investment is safe, all companies, including Gorillas can fall big time) which a "Gorilla Candidate" just cannot provide.Fair 'nuff. And astutely proposed. However, Tinker, you are changing the definition of a Gorilla on public threads when that term is defined differently in the two books written by the authors who first proposed the metaphor. I admire your ability to twink aspects of the book to fit your own investment thesis, but I encourage you to clarify for readers the difference between your definition of a Gorilla and the authors' definition when you proclaim a company a Gorilla. Otherwise, it's inescapable that readers assume you are using the authors' definition.In the SI thread, we long ago addressed the various ways one might measure a tornado. I agree with you that we probably shouldn't limit ourselves to measuring it purely by revenue mostly because the revenue attributed directly to the sale of a specific product is often (usually?) not available if the company is selling more than one product. Your example of measuring CDMA adoption is a perfect example and is the reason I join you in measuring its tornado by growth of world-wide CDMA subscribers. In the case of Gemstar, I could buy the argument that the tornado is already in place based on adoption by the content broadcasters and the international consumer-electronics companies. But evidence of adoption by the end users of tornado-like proportions is not yet available, making it highly questionable in my mind that Gemstar should be crowned the Gorilla using the definition proposed by the authors of the book.Where we disagree is that Gemtar's tornado should be measured by advertising revenue. Advertising revenue is an income stream that is not attributable to Gemstar's Gorilla-like characcteristics; instead, it is attributable to the Godzilla role Gemstar plays. Indeed, the most exciting aspect of Gemstar for me is that the company's Gorilla-like characteristics make the Godzilla-like characteristics possible, a unique opportunity found in few companies.Where we agree is that Gemstar has no chance of not becoming the Gorilla of their space. However, because I can't confirm that the company has already achieved that lofty status, it's my thinking that weighting of the stock in our portfolios should reflect that we don't know when the tornado that adds a degree of safety to our investment will begin.Just my opinion.--Mike Buckley
Akoni,Because I'm not clear on the various revenue streams available to NASDAQ, I don't have an informed opinion about the theory you propose. You may or may not be onto something.--Mike Buckley
Would you be willing to classify the reveues that Gemstar derives from the advertising as in a gorilla game or a godzilla game?I would classify the ad revenues as a Gorilla game and not a Godzilla game and here is why:A Godzilla game involves a networking effect without a proprietary draw. Meaning that for example the more people that use EBay the more that future customers will be drawn to EBay. This networking effect is not because of any proprietary lock on the market. But the result is largely the same as seen in a Gorilla market - value will tend to the extreme and not the mean (ie, EBay will continue to pull in the majority of wealth in the sector and profits for EBay will not tend to zero or the mean as more competitors enter the market). The basis of EBay's power is its first to market with a critical mass of users. This is opposed to Gemstar which has a proprietary lock on the market due to its IP. The non-proprietary - EBay, AOL, Yahoo! - type lock on the market does not seem to exist for GMST. One IPG is as good as another as long as they all function. My use of the IPG does not depend on the fact that a critical mass of other people also use it. The reason I use it is because it is provided in the products I buy. Without the IP GMST would hold no market power. Its guides would not achieve critical mass to advertisers. GMST would lack the market power necessary to compel the distribution of its guides. In conclusion: since the basis of GMST's market power is proprietary IP and not a networking effect involving a critical mass of people, GMST is in a Gorilla game. TinkerP.S. Of course it could be argued that GMST has a backwards Godzilla power. Meaning that if no one guide achieved critical mass sufficient for maximizing ad revenues then everyone in the industry would need to standardize around one guide to create sufficient critical mass. Since GMST is the only guide achieving critical mass in the market, the industry would have to turn to GMST's guide. It would seem though that if GMST had to rely on this sort of Godzilla power the terms it would receive in revenue sharing would not be nearly so generous. Given the disparate interests involved it would also be very difficult to get all the concerned parties to standardize around any one solution.So GMST a powerful Gorilla and a weak Godzilla.
Tinker,I believe your thinking of Gemstar's advertising as a Gorilla play is flawed in the following comment if I understand you correctly:Gemstar which has a proprietary lock on the market due to its IP. Gemstar does not have a lock on the advertising placed in EPGs and IPGs. It's lock is only on the EPGs and IPGs themselves. Anyone can create their own EPG and IPG which will almost assuredly result in increased royalties to Gemstar. But the advertising placed on those competing IPGs and EPGs is the result of the competitors' execution, not Gemstar's. I'm not ignoring that Gemstar might choose to include a portion of the advertising revenue in their negotiations to allow a company to use their EPG or IPG technology, but that's not relevant to determining that said revenue is Gorilla-based. In the end, the advertising opportunities are non-proprietary opportunities enhanced by the effects of networking, making that particular revenue stream a clear Godzilla play, not a Gorilla play. Again, just my opinion.--Mike Buckley
Knee,Thanks for the response. I think we're on the same wavelength. Looks like we both have more questions than answers, huh.I buy into the Gorilla Game thesis both cognitively as well as via my investments. It's the valuation thing that I continue to struggle with. There's a leap of faith that I've been taking on high valuations of the stocks I buy and hold and while its worked out well, it still keeps me thinking. What if AG changes margin requirements or bumps up interest rates to offer other opportunities to investors? How high would he go before the flow into the NASDAQ changes? How would this impact the Gorillas and Kings which are often part of the index?The demographics of the investing population certainly is one cause of the bull market. Combine this with the birth of the Internet and on-line investing and you have a potent potion. I also believe that index funds have had an underrated impact on stock valuations. How many of us regularly dump part of our paychecks into our 401-k or 403-b into index funds which are great investments but in essence invest blindly in the pre-selected stocks of the index. It would be really interesting to see how much of the market cap of a QCOM or a GMST were due to index investing. If that index variance were broken out and accounted for separately, would metrics like P/S and P/E be more in line with historical trends? Don't know and maybe it doesn't matter but it would be interesting to see.Well, that's enough heavy thinking for a Sunday. It's time for a run. Akoni
but I encourage you to clarify for readers the difference between your definition of a Gorilla and the authors' definition when you proclaim a company a GorillaYou are correct Mike. The true aspect of a Gorilla is a company who is already in the Tornado and demonstrably so. I am tweaking the definition to suit my conservatively aggressive investment thesis. For the GG purist a purchase of GMST may still be too early. Although in Godzilla terms, since GMST has reached a critical mass (although I assign that critical mass to Gorilla elements) GMST will achieve Godzilla revenues. Which may alleviate some of the extra risks of an earlier purchase.I guess what I look for is times to enter companies (consistent with the intent of the GG) at times when risk is minimal and rewards are great. This is the essence of the Gorilla Game. From a strict doctrinal approach Gemstar is not a Gorilla. We don't have the quarterly revenue growth.But from an analysis of the intent of the Gorilla Game of finding lower risk high return investments GMST clearly has at least approached Gorilla status. Its forward revenues have excellent visibility and it has locked up its market absent an unexpected turn in litigation or discontinuous event like Internet television.The real risk is, and I guess I've been discounting it because it seems so certain is that the guides will not provide the sort of revenue that we have all been anticipating. $100 per household to GMST seems to be the going figure. If GMST's guides failed to produce such revenue the Street would be disappointed and the stock would certainly fall to levels which better represent these lower revenue expectations. SO EVERYONE KEEP IN MIND THEIR IS THIS RISK! AND IT IS A REAL RISK.However, the same is true of Q as well. Their is fear out their that Q's chip revenues per phone (its ASPs) will continue to fall and to fall to such an extent that their future revenue streams will not justify their current market valuation. In this sense then it could be said that Q is not a Gorilla. It does have a lock on its market (absent an unexpected turn in litigation or discontinous innovation) but we don't know if CDMA will be able to penetrate the world market and displace GMS or if Q will be able to keep the same revenue level per chip into the future. As such it could be argued that Q should also not dominate a person's portfolio because it does not have the Gorilla power of a CSCO, MSFT or INTC at this time. If Q fails to reach world dominating market levels over the next couple of years and if its ASPs on chips fall Q's stock price will certainly suffer to reflect these lower revenue expectations as well.But perhaps this analogy is incorrect. I will have to rethink through it and would appreciate any help in this process. If Q is a Gorilla (which I have no doubt about - please stop group think if that is occurring here) then is GMST more risky than Q at this time? Maybe it is but I think the issue needs to be clarified a bit better.Thanks for any input.Tinker
Tinker,Thanks for acknowledging the issues I urged you to consider. Now for more discussion. :)The real risk is, and I guess I've been discounting it because it seems so certain, is that the guides will not provide the sort of revenue that we have all been anticipating.Relevant to our discussion about whether or not the tornado has begun, I think the risk that the revenue will achieve those levels later than when the market expects to happen is greater than the risk that they might not achieve those levels at any time.There is fear out there that Q's chip revenues per phone (its ASPs) will continue to fall and to fall to such an extent that their future revenue streams will not justify their current market valuation. In this sense then it could be said that Q is not a Gorilla. Sorry, but you're again veering far and wide from the issues that define a Gorilla. The concerns you mention about revenue have to do with the value of future revenue streams. They don't have anything to do with whether or not Qualcomm is the Gorilla of the CDMA space.Your comments about justifying Qualcomm's market cap brings up my substantial concern about valuing Gorillas. 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.Sorry to disagree again but ... :)we don't know if CDMA will be able to penetrate the world market and displace GSM or if Q will be able to keep the same revenue level per chip into the future. ... If Q fails to reach world dominating market levels over the next couple of years and if its ASPs on chips fall Q's stock price will certainly suffer to reflect these lower revenue expectations as well.In my mind it's not necessary for Qualcomm to displace GSM in the next couple of years. However, it is important that Qualcomm take huge market share in geographic areas where cellular phones are not used as prevalently as in the well established areas. Similarly, it's not necessary that CDMA dominate world markets in the next two years. Just the opposite, I can't imagine that it would be possible for that to happen so quickly and disagree with those who believe the current stock price requires that expectation. Please explain the details of marketshare and revenue.[Qualcomm] does not have the Gorilla power of a CSCO, MSFT or INTC at this time.If you're suggesting that Qualcomm does not currently have the power of those three at this point in time I agree. If on the other hand you are suggesting that Qualcomm doesn't have the power they enjoyed at their earliest stage of Gorilladom comparable to Qualcomm's current stage, I disagree entirely. My excitement for Qualcomm's potential is rooted in my thinking that it does share the power those three companies had in their earliest stage of Gorilladom. But perhaps this analogy [of concerns about Gemstar and Qualcomm] is incorrect. I believe your analogy would be valid if the premises you assumed in each case were valid. Not agreeing with your premises, the question of the validity of your analogy is a moot point.In all of your comments about risk, I'm not sure how to interpret the context of how you perceive risk. If I understand you correctly, you appear to equate a significant drop in the price of a stock as risk. If that's the case, I disagree. Cisco's stock tanked 40% twice in the last three years yet the risk in my mind didn't increase. I measure Gorilla-Gaming risk over a period no smaller than a decade, recognizing that some tornados last five years and some companies enjoy several tornados. The power of a Gorilla remains fully in place, thus keeping its long-term risk relatively low, even when the market in which it sells its product progresses slower than at other times. The real strength of a Gorilla comes not in the tornado, but on Main Street when it exercises its power to increase margins after having locked in unassailable market share.You mentioned that it might be too early to own Gemstar's stock relative to classic, by-the-book Gorilla Gaming. I'll run an idea by you that I don't remember mentioning on this thread that might be interesting.My theory has been for a long time that Gemstar's EPG/IPG technology is an interesting hybrid of enabling/apps technology. Before readers respond to this, I hope they will crack the book and carefully read the details that define enabling and apps technologies. If I am right that their technology is partly apps technology, an investor could have bought the stock "by the book" as I did quite awhile ago when the product had clearly crossed the chasm and entered the bowling alley.It's really important that you and other readers understand that my recent disagreement with you (in contrast with previous unilateral agreement over a period of time) doesn't change my opinion that the content you provide here and elsewhere is invaluable.--Mike Buckley
Mike,You bring up the point about valuation. The ten stocks to rule the world is an impressive list of richly valued apes. Hopefully, for us newer members, the market is still undervaluing them. Is there any way we can go one step further and rank the list based on which has more potential given market and valuations? How do the newer members (who don't yet own these)wrestle with the valuation issue? Thanks
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.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.
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.bes
longing,How do the newer members (who don't yet own these)wrestle with the valuation issue? The easiest way is to plan on holding the stocks ultimately selected for a very, very long time that is hopefully no less than a decade. Should the choice with regard to valuation ultimately prove to be a poor one in context of the near term, time is on your side. If you accurately assessed the company's fundamentals, the strength of the company will ultimately be reflected in a much higher stock price in the long term.Aside from that, I can't be of any specific help other than to offer some general ideas, many if not all of which should probably be used because none of them will be viable strictly on their own merit.1) Be certain that you understand the company, the stage of the product adoption, the size of its market, the growth opportunity, the specific competitive advantages, and the length of time you feel those competitive advantages will prevail.2) Having done Step #1 and assembled the remaining candidates for your portfolio, use every valuation metric you're comfortable with including the traditional ones that don't necessarily apply to Gorilla Gaming.3) Compare the totality of all those valuations among peers of the same industry if you are considering more than one in the the same industry. Compare as best as possible the current valuations with the company's historic valuations, espcially the PSR. 4)To the extent that you can justify the current valuation in context of steps #1 thru #3, you might be onto some likely candidates for your portfolio.5) After having done all that, revisit Step #1 and do a gut check to be absolutely certain you believe in the ability of the company's fundamentals to the point that you won't be concerned if the stock tanks 50% in the first month you own it. If the company doesn't pass that acid test, don't buy the stock.6) For the stocks that don't pass those rigid tests, continue following the fundamentals of the company and the stock valuation, always being prepared to take advantage of a better valuation any time in the next couple of years. When you do that, be sure to remember that it is possible for the stock to be significantly higher a year from now though at a much more attractive valuation.Hope this helps. It's just my way of doing things though there are many ways to make money in the stock market.--Mike Buckley
Slyace,Since you were kind enough to emphasize my thoughts about the market's tendency to undervalue gorillas, I'll add a follow-up to add clarity. While I do believe it will be possible if not likely that Gorillas will at times become over valued, I don't believe the increased undertanding of Gorilla Gaming by the masses will ever cause the opportunity for profits to be lessened in the long term. That's because it's my belief that the masses won't have the discipline to stay the course through a major correction, much less a full-blown recession. Right now Gorilla Gaming appears attractive enough to hoards of people, enough so that I believe the attraction (even when completely misunderstood) plays a part in the unprecedented rise in certain high-tech stocks. But the very people who feel the pressure (so to speak) to buy now before the "new investing paradigm" fully values or overvalues the stocks are the same people who will be the first to abandon the tenets of Gorilla Gaming when the economy tanks and maybe when the first bit of disappointing news that Rule #10 tells us to ignore is released. When that happens, those who have the talent and discipline to act according to the principles the authors provide us, one of the most important being to do so in the the longest of long terms, will be richly rewarded beyond traditional expectations of increased net worth.My opinion.--Mike Buckley
Mike Buckley wroteRight now Gorilla Gaming appears attractive enough to hoards of people, enough so that I believe the attraction (even when completely misunderstood) plays a part in the unprecedented rise in certain high-tech stocks. But the very people who feel the pressure (so to speak) to buy now before the "new investing paradigm" fully values or overvalues the stocks are the same people who will be the first to abandon the tenets of Gorilla Gaming when the economy tanks and maybe when the first bit of disappointing news that Rule #10 tells us to ignore is released. When that happens, those who have the talent and discipline to act according to the principles the authors provide us, one of the most important being to do so in the the longest of long terms, will be richly rewarded beyond traditional expectations of increased net worth.I certainly agree that many will abandon the strategy during a major correction, but the first point you made is also in play: the extent to which the market will overvalue chimps and undervalue gorillas (i.e., regress toward the mean) should lessen as more investors understand the power of gorillas. Also, the percentage of investors pouring money into tech who also are aware of the gorilla game has to be pretty small, but your point still holds.
y2Krash wrote;"my final list of the ten stocks that will dominate the world" I suggest biotechnology should not be overlooked, but a different company may fulfill the bill for these reasons. I am aware rule breaker criteria is not the reasoning of this board, but I feel these are good arguments to add HGSI as a first mover and one with good management.Collaborations:http://boards.fool.com/Message.asp?id=1130088000290000&sort=recommendationsFirst Mover - Vertical Drug Development:http://boards.fool.com/Message.asp?id=1130088000120000&sort=recommendationsSustainable Advantage:http://boards.fool.com/Message.asp?id=1130088000155000&sort=recommendationsManagement and Backing:http://boards.fool.com/Message.asp?id=1130088000175000&sort=recommendationsRelative Strength:http://boards.fool.com/Message.asp?id=1130088000157000&sort=recommendationsPatents:http://boards.fool.com/Message.asp?id=1130088000171000&sort=recommendationsI am as yet NOT long on this company, but plan to be.Hope this is of interest...foolin on,Joseph
In all of your comments about risk, I'm not sure how to interpret the context of how you perceive risk. If I understand you correctly, you appear to equate a significant drop in the price of a stock as risk. If that's the case, I disagree. Cisco's stock tanked 40% twice in the last three years yet the risk in my mind didn't increase.Actually, no. I perceive risk as buying into a stock that is over-hyped and without substance. One that rises on "Linux" hype or on defective patents. A stock whose business prospects (GAP and CAP) do not warrant the price I bought it at. On the other hand I feel very comfortable buying into even an "expensive" stock that has a lock on its market and in a very rapidly growing, tornadic market. For example, I'd still feel good about holding Q today even if I had bought at $700 or so pre-split. It might take a year, but it will come back around I really have little doubt.I do warn about possible precipice drops in price because most people tend to panic in such cases and may be turned off to Gorilla investing in such cases. I want people to know that you have to expect this but that it does not necessarily lead to a poor choice in stock.This is also why I feel comfortable owning a relatively concentrated herd of Gorilla-Candidates. Although not nearly as secure as true Gorillas, their market dominance, competitive advantage, and tornadic market growth are sufficient that within a year any significant drop brought on by the market for any non-fundamental business reason, is very likely to be overcome and then forgotten two years out.So I think we think of risk in similar ways. Of course I am willing to take on some more risk (with a limited and pre-determined portion of my portfolio in well researched and calculated ways - essentially value investing in an explosive and maybe misunderstood situation) than GG advises when I see an appropriate risk reward scenario such as RMBS in January, and now Globalstar. Even in such situations, however, I don't let market prices rule me. I buy in because the market vastly undervalues the companies true market potential and chances for success. I know exactly why I bought the stock, while I continue to hold it, and what will prompt me to sell it. With G*, for example, let the price fall. I don't care. It is not relevant to why I bought the stock. The stock is falling due to uncertainty and the spectre of Iridium. The price at this time has nothing to do with G* position in its market nor the market opportunity in front of it. I doubt very much if anything relevant will come out until next year in regards to my purchase of G* (I'm in at 17, and I consider that a bargain regardless if it falls to $10 or $5). Look at the news, the business, and keep in mind why you bought, why you hold, and what will prompt you to sell. Owning Gorillas are the low risk way to do this. They are the best bets to make you money, and to continue making you money for a long time to come. But even if you venture away from Gorillas from time to time, and get a little more speculative, like with Rule Breakers or into bio-techs for exampole (and I just bought my first biotech IMNR) keep the same discipline and approach.I have made more money doing nothing when everything inside me urged me to make changes in a panic than I have ever made making changes. In total not holding long enough has probably cost me more money in total than I have yet to make in the market.Buy the best people. Know why your buying and don't fool yourself as to why your buying and what risks it entails. Once your in hold it. Don't let irrelvant matters sway you. Tinker
Tinker,So I think we think of risk in similar ways. Agreed. Possibly exactly the same ways. Thanks for taking the time to clarify your ideas about it.--Mike Buckley
"Acceptance by the marketplace" doesn't seem to be a strong reason for scrapping Ballard and Lernout & Hauspie from the list. They come as close, in my view, to being Godzillas as any on the list. The market will accept reality when it has no other choice; conversely, if you wait until the market accepts something, you are often too late for a place on the ground floor.
This sounds like a great list- the stock prices are already so high though. do you know of any stocks that are like the jdsu caliber before it took off and hit the one hundred range??something that is now in the ten or fifteen dollar range?
Hi Krash,You have mentioned Certicom and I have also seen this company mentioned in a couple other places. Do you know where I can find company information or other information on this company. Thanks in advance. Steve
SteveSchultz, I have had some trouble tracking down much information on Certicom, there are some good places though, starting with the Certicom web page, where you can get acquainted with ECC technology. Here are some links:There's actually a Fool Board on Certicom as well as one on Silicon InvestorMotley Foolhttp://www.fool.com/search/query.htm?col=boards&id=&source=mfsearch&qt=certicom&Search=Search&go=1&faq=1&sOrigQT=certicom&oq=certicom&form=1&lf=A&nh=10&rf=1&amo=3&ady=24&ayr=1989&bmo=3&bdy=24&byr=2000Silicon Investorhttp://www.siliconinvestor.com/stocktalk/subject.gsp?subjectid=1132This one is another Certicom message board.http://www.stockhouse.ca/bullboards/forum.asp?symbol=cic&table=listHere's an older link from the same site.http://www.stockhouse.ca/shfn/nov99/112399ca_josef.aspListen to a Certicom Executivehttp://ca.biz.yahoo.com/bw/000217/pa_investo_10.htmlI don't know how accurate it is but here's some researchhttp://ca.biz.yahoo.com/z/a/c/cic.to.htmlHere's a few morehttp://www.infoworld.com/articles/op/xml/00/02/28/000228opswatch.xmlhttp://www.infoworld.com/articles/op/xml/00/01/31/000131opswatch.xmlhttp://www.infoworld.com/articles/hn/xml/99/08/02/990802hnwirelessdata.xmlhttp://www.zdnet.com/pcweek/stories/news/0,4153,2425610,00.htmlBest of LuckKrash
Can anyone tell me of any stock in the ten to fifteen dollar range that would be considered a gorilla much like jdsu before it took off into the hundred dollar range??
sscho47 wrote: << Can anyone tell me of any stock in the ten to fifteen dollar range that would be considered a gorilla much like jdsu before it took off into the hundred dollar range??>>The inside scoop says this stock is definitely going to be the next gorilla: Zipjet (Ticker ZPJT). . . they were the only firm able to meet the stringent demands of the Martians . . . from vector nebula. Sorry to demean this excellent board . . . just couldn't resist injecting a little humor.Dave
When you read that someone owns a stock like JDSU and that his average cost per share is ten or fifteen dollars, that doesn't mean he paid ten or fifteen dollars for it. It has probably never been available for that price except to institutional investors who bought initial ipo shares. To purchase shares of a quality company at ten to fifteen dollars per share, buy it now and wait a few years. The stock will split several times, and you will have purchased it for ten to fifteen dollars per share.
"initial ipo shares" Whoops. We'll have to send that to the department of redundancy department.
To purchase shares of a quality company at ten to fifteen dollars per share, buy it now and wait a few years. The stock will split several times, and you will have purchased it for ten to fifteen dollars per share.Infact if you bought today at around $120+, it would only have to split three times! Not all that unlikely, if you're patient. Good luck.Tim
Out of curiosity, where would I get information on the NASDAQ net investment figures? Any idea? This is my first post on the MF Boards... Hi, Akoni...welcome to The Fool. There's tons of info on Nasdaq's website (http://www.nasdaq.com...of course). Hopefully you can find your information there.Joe
I recently read an investment newsletter article,about GMST. It was Negative. That reminds me if there are any investment newsletter readers/subscribers. That would like to share/swap PROFESSIONAL Insights, with other readers. Go to "The Lions Den"-board, where the mission is to tear these over-hyped companys to shreads. And get down to the real-long-term-value/growth companies. Our picks might not rule the world, but then there was no Y2K-Crash either. Did someone say irrational-exuberance, oh yeah it was the boogy-man.
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