Customer Reviews

The Gorilla Game : An Investor's Guide to Picking Winners in High Technology (AUDIO CASSETTE)

5 star:		(17)
4 star:		(11)
3 star:		(3)
2 star:		(1)
1 star:		(3)

 

 

At first glance a high tech stock investment guide that relies critically on you being able to tell the difference between gorillas, monkeys and chimps appears unlikely to be a serious money maker. Yet if you had followed the investment philosophy outlined in Geoffrey Moore's Gorilla Game at the beginning of this decade, you could have turned $10,000 into a couple of million dollars.

The stock market has attracted no end of charlatans and snake oil salesmen with a plethora of advice on how to invest and grow rich, ranging from complex mathematical techniques such as chaos theory to fairly simple advice such as buy stocks in companies you know and like. In its simplest form, most of the advice boils down to "buy low, sell high." though it is usually couched in more cultured language such as "buy at the peak of a stock's dividend yield ratio, and sell at its trough."

Geoffrey Moore and his co-authors, Johnson and Kippola, have no use for such language. In a straight-forward and entertaining book, they outline how some high tech companies grow exponentially to dominate the segments in which they participate, how they become gorillas. Generally, the authors provided a lay-man's explanation of what has recently come to be known in economics as the Theory of Increasing Returns. Some of the high tech companies that best epitomize this theory are Microsoft, Intel, Cisco Systems and IBM in its heyday. These companies were able to get their proprietary architectures accepted as the standard (sometimes completely by luck), and they were smart enough to exploit this initial standardization and the high switching costs it entailed to gain market share rapidly and dominate their industries. These companies are the ones Moore calls Gorillas.

In addition to the Gorilla, who is the dominant leader in a segment, we also have the Chimp (the challenger) and the Monkey (the follower). The chimp had a shot at being a gorilla but didn't make it. Unable to get over this, he limps along muttering "I could have been a contender." The example Moore brings up of a chimp is IBMs OS/2 operating system. The monkey has no such hang-ups and essentially mimics the gorillas product. An example would be AMD with its Intel-like chips. As Moore, and his co-authors point out, a monkey lives or dies on execution.

From an investment strategy perspective, the rules are simple. If the company is a gorilla, buy the stock. If the company is a chimp, stay away from its stock. If the company is a monkey, it is probably a good trading stock (buy at the lows, sell at the highs).

Perhaps the best part of using the gorilla game as an investment strategy is that it is a low maintenance strategy, letting you make money without biting your fingernails on a daily basis. The hard part is finding new gorillas--in many sectors they may never develop.

The book does a pretty good job demystifying high-tech industries, particularly from a competitive strategy point of view. This is a must read for at least three kinds of people: amature investors, high-tech investors who concentrate solely on financial statements (but know nothing about Michael Porter), and value investors who pick low pe stocks. This is an eye-opener particularly for traditional value investors: gorillas usually have the highest pe (or p/sales) of the industry, and yet they are the winners. The book is a little too long. The idea can be explained clearly and thoroughly in the equivalant of a journal article. Many of the materials are sugar-coated for unsophisticated investors. I think the book is overrated, but deserves a careful read.

This book has totally transformed my stock selection technique and resulted in a portfolio that is absolutely crushing the general market. I can not say enough about how highly I regard the information outlined in this book.

Which high-tech stocks win on Wall St and why? The book sets forth a framework in which investors can understand how to value one stock in comparison to another. After reading it the world of investing finally started to make sense. This book is useful for any person that is out to find the next Microsoft. Buy this book.

As an active investor in tech stocks (information technology), I highly recommend this book to other investors who are already in tech stocks or are considering it. The book explains in laymans terms the dynamics of the technology marketplace . The information it provides will assist you in how to differenciate each tech company from another in regards to it's particular role in its market, and the investment strategy you should pursue (short/intermediate/long term). I liked the book so much, I'm ordering the cassette as well to wring every ounce of investment advice I can get out of it.

A popular pastime for the past 50 years (and possibly before that) has been to look at the stocks that would have made you the most money in the last 10 or 20 years and devise an investment approach to find the next ones going forward that will do as well or better. I have lost count of how many books I have read that have taken this approach.

I found the Gorilla Game to be refreshingly above the pack in this area. The authors do an excellent job of describing some of the ways that technologies get adopted, when the stocks do well (and when they don't), and when to buy and sell stocks in technology companies. They also devise a fairly detailed, somewhat risk-controlled investment process, and detail how it would have done in a number of case histories. From the backward-looking perspective, the book is solid.

The weakness of such backward looking methods shows up in their new material in the revised edition (1999) on the Internet. Although some aspects of their model apply to the Internet, many do not. They are left needing to vaguely explain how so much money was made so quickly in Internet stocks. Their explanation is actually pretty solid, but they never quite come out and say that their methodology will not get you all of the fast-growing stocks in technology.

They needed not be defensive. No methodology is perfect. The main weakness of this one is that is designed around semiconductors, software, and computers. The technology patterns can look a lot different in future technologies. For example, what will happen with companies like Gemstar that lead in new television technologies that could disrupt the Internet for direct marketing? The reason this point is important is that the barriers to switching are higher in the technologies studied here than in many other areas. If you get into a low cost of switching area (like business to consumer marketing on the Internet), you could invest in an industry leader and still lose your shirt. Although the book acknowledges these issues, it probably doesn't create a substantial enough warning.

The book is aimed at the medium knowledge investor (about the markets and technology). I hope they bring out a more advanced version. They decided not to go into specialized semiconductors like analog devices where enormous profits may lie in the future, because of concerns about not going over the heads of readers. A lot of the best run technology companies with enormous growth potential in markets with high bariers to competitors were not discussed in this book. I am sure most readers would be willing to spend some time learning about these other markets in order to make enormous gains.

Despite my quibbles, this is a fine book that will help all but those who are already quite knowledgeable about technology companies and technology investing. Good luck in capturing those irresistible gains in the future! Perhaps you will be the first person you know to identify the next irresistible growth enterprise!

I try to read all the newest stock market books. This one is full of new insights that I will be able to profit by in my future trades. This book should be in the library of all serious investors. Another book that I highly recommend for those who are interested in picking high tech stocks is MAKING DOLLARS WITH PENNIES: HOW THE SMALL INVESTOR CAN BEAT THE WIZARDS ON WALL STREET by R. Max Bowser. Bowser has 25 profitable years of investing in high tech as well as other stocks, mostly in the low-priced range. Bowser explains twelve factors that one should look at before picking a stock. His system is compatable with the methods written about in THE GORILLA GAME.

Moore et. al. do an excellent job of presenting a coherent methodology that can be followed over time to invest in high technology. However, being both an investor and a technologist myself, I recommend to anyone wishing to follow this methodology to pick one or two market segments (e.g. Electronic Commerce software, IP telephony) and live, breathe, and sleep the chosen market segment: subscribe to newsletters, get to know each player, study the products of each company, talk to customers, etc. etc. Then, and ONLY THEN, will you be able to profit from the book's advice. At issue is the fact that in order to pick the winners inside a high growth market segment you MUST understand in depth what the technology is all about, what each company has to offer, their competitive advantage, market projections, potential entrants, etc. And then wish yourself some luck... But all in all, a great book!

The high-tech stock collapse has led to a lot of agonized soul searching from burned investors in the past year. How in the world did all those dot-com pet stores get funded? How did Cisco ever get a $500 billion dollar market cap, and how did so many other companies get valued at tens of billions of dollars with no profits and little sales?

Well, one problem was that too many people read this book.

Don't get me wrong--Geoffrey Moore is definitely a heavyweight business thinker. His earlier books were tremendously helpful in explaining the strange, non-intuitive ways in which high-tech markets work. But here, he and his coauthors attempt to build on his earlier work to offer a "gorilla investment strategy", which has now become a victim of its own popularity. *Any* mechanical investment scheme will eventually fail if it becomes too widely used, and it is easy to find the roots of the investment idiocies of the late nineties in this book. Just look for emerging high-tech market leaders, he says over and over, with little attention paid to just how much this eventual market dominance might be worth. Worse, he asserts that you can't know which company will emerge as the dominant player in a given sector, so invest in them all. Venture capitalists, once they realized how many investors were following this strategy, responded by cranking out unlimited numbers of startups doing exactly the same thing; as long as they were competing in a market that might eventually select a "gorilla", then they could be confident of "flipping" a successful IPO to naive investors. Anyone who used this book as a basis for investing over the past couple of years would have, in effect, been getting suckered into a Ponzi scheme.

Moore creates a vivid symbolic menagerie to explain the dynamics of high-tech marketing, but any high-tech investor needs to know that in addition to the authors' gorillas, chimpanzees and monkeys there are a lot of dogs. Also sharks.

This book was recommended to me by a seasoned, sophisticated investor. It's a must read--not only for technology investors (people who invest MONEY)---but it's perhaps even more important for persons trying to decide which high-tech company to work for (people who invest TIME). That's because the potential appreciation from employee stock options makes one's choice of employer more important than ever.

Everyone has wondered how they could have latched onto a stock that would have turned a few thousand dollars into over a million. In recent years, EMC, Cisco, and Microsoft provided such opportunities. Yet few bought and held those stocks to get the full benefit of the ride. In this book, you will find some ideas for locating the next stocks that could do this for you. Keep in mind that the odds are long against you though. A lot of serendipity is involved.

A popular pastime for the past 50 years (and possibly before that) has been to look at the stocks that would have made you the most money in the last 10 or 20 years and then to devise an investment approach to find the next ones going forward that will do as well or better. I have lost count of how many books I have read that have taken this approach.

I found the Gorilla Game to be refreshingly above the pack in this area. The authors do an excellent job of describing some of the ways that technologies get adopted, when the stocks do well (and when they don't), and when to buy and sell stocks in technology companies. They also devise a fairly detailed, somewhat risk-controlled investment process, and detail how it would have done in a number of case histories. From the backward-looking perspective, the book is solid.

The weakness of such backward looking methods shows up in their new material in the revised edition (1999) on the Internet. Although some aspects of their model apply to the Internet, many do not. They are left needing to vaguely explain how so much money was made so quickly in Internet stocks (before they began to plummet to nothing in March 2000). Their explanation is actually pretty solid, but they never quite come out and say that their methodology will not get you all of the fast-growing stocks in technology. I doubt if any methodology could do that for you.

They needed not be defensive. No methodology is perfect. The main weakness of this one is that is designed around semiconductors, software, and computers. The technology patterns can look a lot different in future technologies. For example, what will happen with companies like Gemstar that lead in new television technologies that could disrupt the Internet for direct marketing? The reason this point is important is that the barriers to switching are higher in the technologies studied here than in many other areas. If you get into a low cost of switching sector (like business to consumer marketing on the Internet), you could invest in an industry leader and still lose your shirt. Although the book acknowledges these issues, it probably doesn't create a substantial enough warning.

The book is aimed at the medium knowledge investor (about the markets and technology). I hope they bring out a more advanced version. They decided not to go into specialized semiconductors like analog devices where enormous profits may lie in the future, because of concerns about not going over the heads of readers. A lot of the best run technology companies with enormous growth potential in markets with high bariers to competitors were not discussed in this book. I am sure most readers would be willing to spend some time learning about these other markets in order to make enormous gains.

Despite my quibbles, this is a fine book that will help all but those who are already quite knowledgeable about technology companies and technology investing. Good luck in capturing those irresistible gains in the future! Perhaps you will be the first person you know to identify the next irresistible growth enterprise that creates over a thousand to one gain! I hope you do.

May you be that one person in one hundred who outperforms the market over a lifetime.

Otherwise, I suggest you play the odds and buy indexed mutual funds. John Bogle's book, Common Sense about Mutual Funds, will be very helpful to you in this regard.