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No. of Recommendations: 26
This isn't to say that one may still not make SOME
profit in these stocks, but the odds of coming even
close to earlier gorilla returns seems remote.


You've hit on a topic which has been a thorn in my
side since I read the book.

Take a look at Cisco's advances since 1990, a double
one year, a flat year thereafter, then a 70% gain,
then another double, etc.  In comparison a
possible emerging gorilla like Rambus nearly
quadruples in a couple of weeks!  Qualcomm has a 
2000%+ year, king JDSU nearly eclipses those gains.

In Rambus I can honestly say I feel I got in at the
bottom.  Barely.  I bought in the mid-70's a few weeks
before the price exploded.  Am I happy over the
advance?  Yes!  But I would far rather see a steady
Cisco like advance.

Here's the problem for the small-time investor like
myself.  I can ususally throw together about $1000-
$1500 per investment.
  
For argument's sake let's assume I buy Hotstock.com.
Hotstock becomes a 58 bagger for me...wow!  These days
maybe it only takes 4 years for it to happen.  That is
realistic...considering it is "only" a 2.76x (376%)
yield per year.

          Contribution   Yield   Total
Year 1    $1500          2.76    $4140
Year 2    $1500          2.76    $15566
Year 3    $1500          2.76    $47103
Year 4    $1500          2.76    $131505

That's a lot of money - $131505!  

But let's slow things down to a more historical growth
and spread the 58 bagger over a 10 year period.

          Contribution   Yield   Total
Year 1    $1500          1.50    $2250
Year 2    $1500          1.50    $5625
Year 3    $1500          1.50    $10688
Year 4    $1500          1.50    $18281
Year 5    $1500          1.50    $29672
Year 6    $1500          1.50    $46758
Year 7    $1500          1.50    $72386 
Year 8    $1500          1.50    $110830
Year 9    $1500          1.50    $168495
Year 10   $1500          1.50    $254993

The slow and steady method allows you to contribute
and "average up" and therefor produces a net worth
from this holding nearly twice that of the more
explosive pace.
 
An argument to the contrary might be, 'Yeah, but you
made so much money in only 4 years!  You can gain more
efficiently if the market is recognizing gorilla power
quicker.'

My arguments against this are -

1)  The explosive pace of the current market makes it
exponentially more difficult for you to enter near 
"the bottom."  Since it is near impossible to find
these companies at the very beginning, assume you found
them after 1 year.  Your 3 year growth would leave
you with $47103, while the 9 year growth model would
give you $168495, 3.5 times greater worth.

2)  How easy is it to keep finding gorillas or very
powerful kings over and over again?  So many of us are
profiting richly from this bull run.  Is this the way
the next decade will go?  If so, I am going to be one
rich mofo.  But logic tells me this is an aberation
and things will slow down.  I mean, is it really so
easy to find 50 baggers?

I believe the gorilla game is very viable.  I
feel a need to be more aggressive and grab companies
prior to the tornado, but that is my choice.  Waiting
for the tornado, as you put noted, seems like a 
guaranteed missed 10-20 bagger.

A great example of the unbelievable bullishness is 
Juniper.  They look great but for now I won't touch
them.  A next generation Cisco?  Maybe.  But Cisco
has a lofty P/S of 30+.  Juniper's is well over 200.
It looks to me like the market has priced all of the
near term growth in already.

Dan
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