|yep, and ten thousand also-rans for each of these "oh i recognized him"s. |
With your fondness for academic finance, you may have heard this joke:
A finance professor is walking down the street with a student. In front of them is a $20 bill. The student says, "look, professor, $20!" As the student begins to lean down to pick it up, the professor says, "Don't bother. If it was really a $20 bill, some one else would have already taken it".
OK, so it's a bad joke, but you get the point.
please show me the statistically significant results from academic studies showing that people can identify underpriced stocks in advance in today's market according to gorilla game theory and make massive profits on them.
Demanding impossible data from an opponent is an old debater's trick, Mucho.
It's not really possible to prove that buying MSFT in the early nineties was anything but lucky. The fact that the principles espoused in TRFM would have led us to buy MSFT & INTC around 1990, and CSCO shortly thereafter is of dubious importance, given that TRFM was inspired by these companies. We can hardly look to these companies for validation of its theories.
Now I personally believe, as with many others on this thread, that TRFM has tended to overstate the greatness of Gorillas, notably the "always undervalued" bit, but also in terms of their invincibility in the market. While the Gorilla Game does a good job of laying out the basics of high-tech markets, and why proprietary control of an open architecture is so very valuable, it's important to remember that things can and do go wrong for even the greatest of companies. Our stocks need all the advantages that they can get--proprietary control of an open architecture, yes, but also great management, strong balance sheet, powerful brand, friendly regulators, etc.
So the point is, TRFM isn't a simple formula for finding "the next microsoft", or cisco, or whatever. It's very possible that we will never see a company grow as rapidly as CSCO did in the 90's. What TRFM does do, however, is basically say, look:
1) Competitive advantage matters.
2) Proprietary control of an open architecture is a strong source of competitive advantage.
The rest is details. People on this thread tend to believe in these principles, not just because they worked for MSFT, INTC, CSCO, etc, but because they make sense, intuitively. We tend to believe that if we can identify companies that have (or, depending on the investor, are apt to gain) proprietary control of an open architecture, those companies will have a competitive advantage over their competitors. Depending on several other factors, these companies may be good candidates for investment. There will be some clunkers in there (and also some false-positives), but I've a hunch that several of the best-performing companies of the next decade will come from those that we're discussing.