| To: Michael Burry who wrote (7199) | 5/18/1999 12:42:00 PM | | From: Bob Rudd | | | |
Mike:
<<I think that the Gorilla Game describes history well. Applicability to the future, well... >>
For 'Gorilla Game' one could substitute Buffettology, Value investing, "What Works on Wall Street" and virtually any other method that has shown itself to be useful for a time...even a long time. And these are certainly times that test time-tested methods.
One of the most costly mistakes an investor can make is to apply historical periods and methods as templates to situations that appear similar but differ in important ways [Accounts of the 87 crash were repleat with templates of 29 overlaying nearly identical chart patterns to 'prove' the inevitability of collapse]. But a worse error, IMO, is to ignore perspective that methods like Buffett's and Gorilla provide to analyzing the value or competitive context of a situation. My earlier suggestion on reading Gorilla was about that, not an absolute assurance that AAPL was toast due to Microsoft's dominance. It probably is, and I personally wouldn't bet on it. But I haven't studied it closely since having it breifly on my 'to short' list [I didn't].
BTW: Did you get that file I sent on EVA research? |
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| To: Bob Rudd who wrote (7200) | 5/18/1999 12:59:00 PM | | From: Madharry | | | |
I guess the gorilla game makes sense to some extent some people perform better than others, and frequently in a business the leader makes the bulk of the profits, unless it is an Amazon. HOwever it seems to me that technology changes with each cycle and there is no guaranty that the leader in one cycle will be the leader in the next cycle, a company can rise again from oblivion with a great product in its next cycle. Microsoft may be broken up yet! I am now and have been playing technology stocks that have poor current results but promising technology coupled with stakes in other tech companies that are not IMHO reflected in their market values. Specifically VOCL and ALSC. VOCL has yet to turn a profit but it has signed agreements for a 14 city trial with China TELECOM. SHort term risk is mitigated by $3 in cash and a significant stake in IXTC a private company currently owned by ATT, VOCL, among others and headed by TOm Evelsin, formerly of ATT. Only a matter of time before this one goes public.
ALSC, Alliance semiconductor, has stakes in Broadcom and a couple of Taiwanese foundries. Not sure about their products but they seem to make some pretty good investments which I estimate are worth double the current market price.
FOr straight value seekers there is always Deswell. I added today and am happy with my 8% dividend as I wait for its inexorable rise to a realistic share price, in the $15-19 range. |
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| To: Michael Burry who wrote (7198) | 5/18/1999 2:27:00 PM | | From: cfimx | | | |
>>If you really knew what a Buffett-like stock was,
I'd expect to see your real name and a record to prove it. <<
So I need to somehow PROVE that I know what a Buffet-like stock is? If there's one thing I am NOT searching for, it's YOUR approval.
As you EVOLVE as an investor Michael, consider that it will be a HUMBLING experience at times, with emphasis on the word humble. In a more evolved state, you will also have THE answer as to why it is YOU NEED to tell the world that you are the "proud owner" of BUFFET-like stocks, whether they ARE or not. |
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| To: cfimx who wrote (7202) | 5/18/1999 3:35:00 PM | | From: Michael Burry | | | |
If there's one thing I am NOT searching for, it's YOUR approval.
Hard to see where I was implying either approval or disapproval of you. I just see a lot of people applying a cookie-cutter approach to Buffettology, and missing the point.
In a more evolved state, you will also have THE answer as to why it is YOU NEED to tell the world that you are the "proud owner" of BUFFET-like stocks, whether they ARE or not.
Need? Hey, it's a thread for discussion of this sort of stuff. I wonder why anybody, including you, feels the need to post anything here? If this sort of stuff bothers one, then one may leave.
Ever evolving,
Mike |
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| To: Bob Rudd who wrote (7200) | 5/18/1999 3:48:00 PM | | From: Michael Burry | | | |
Bob,
I guess to me the GG is based upon something much different than Graham's or Buffett's teaching, with a much shorter historical foundation. As to how many tech investors have read it, I'd say a
good number have probably become familiar with it. Non tech investors and tech speculators maybe not.
Re: AAPL, only time will tell who wins this argument. Me and the newbie or the the rest of most of this thread and visitors to my site who've e-mailed me to tell me how AAPL could never be a value stock and definitely should not be a long-term hold. A good analyst friend even sent me a 6 page report outlining the bear case. I still don't agree.
Re: EVA, I did get the file; thank you. I also came across some of Buffett's discussion of EVA. I am bothered as he is by the tenet of estimating a cost of equity using EM-based CAPM, and the debt issue. Buffett has said before something like that the margin of safety should be so large that one shouldn't have to carry it out to the nth decimal point. Maybe I too should just set my hurdle rate for would-be Buffett-like investments, and leave it at that, and continue to also use my other measures. Still working on this concept.
Mike |
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| To: Madharry who wrote (7195) | 5/18/1999 4:10:00 PM | | From: Michael Burry | | | |
My principle on Oracle is that they are well-positioned to continue earning high ROE/ROIC. Over the last 10 years, they've steadily grown profits, book value, and maintained a ROE on average of about 32%. Return on Capital sits up around 30% on average. So at a recent PE of about 30 (in the lower half of its five-year range), the company still looks to return between 25% and 35% compounded annually. There's a big margin of safety there, but only IF you think it can continue to earn these types of returns. I've become convinced that despite some likely turmoil this year, it can. It has hit big turmoil twice before and recovered well to the same range of returns.
Mike |
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| To: Michael Burry who wrote (7203) | 5/18/1999 5:06:00 PM | | From: James Clarke | | | |
Alright guys, lets evolve onto onther topic...
Anybody know anything special about TRW and why or why not it might or might not be a good value here? (and let's hope we all don't start writing sentences like that - sorry) |
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