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The Gorilla Game: Picking Winners in High Technology Hardcover – August 25, 1999
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Finding the next Microsoft has been the Holy Grail for many investors. However, anyone who has dabbled in technology stocks can't help but be dismayed at their extreme volatility--it's not unusual for tech stocks to gain or lose 10 to 20 percent in a single day. So how can you win in this market and find the next Cisco, Intel, or Oracle? The key to winning, says bestselling author Geoffrey Moore, is to play the "gorilla game."
Moore's previous two books, Crossing the Chasm and Inside the Tornado, are the bibles for many marketing professionals and product managers. In these books, Moore describes the life cycle common to the successful adoption of technology products and pinpoints moments in the cycle, for example, "the chasm," the "bowling alley," and the "tornado," where products can either flourish or fade away. In The Gorilla Game, Moore takes these concepts, with the help of coauthors Paul Johnson and Tom Kippola, and applies them to the task of finding gorilla stocks--ones that dominate their market niches. The book looks at how the market values technology stocks and provides case studies of markets where gorillas have been born. Moore and his coauthors put their ideas to the test in the final chapter and pick a portfolio of stocks that they believe have the potential to become winners in the gorilla game. The result is a highly perceptive investment guide that anyone who's a fan of Moore's earlier work will find exciting and profitable. This revised edition, published a year and a half after the first, includes a new chapter on valuing Internet stocks. --Harry C. Edwards
"Eight hundred pounds of good investment advice! I wish I had had this book and its investment philosophy twenty years ago." -- Sandy Robertson, chairman, Robertson Stephens Divisionof BancBoston Robertson Stephens
"High-tech is a particularly treacherous area for investors. The Gorilla Game gives investors a powerful framework within which to develop investment strategies." -- Alfred R. Berkeley III, president, The Nasdaq Stock Market, Inc.
"If you have more than a passing interest in high-tech investing, you ought to find this an indispensable and highly readable guide...It also provides a conservative, risk-averse framework for buying and selling these stocks based on fundamental changes in the marketplace." -- Motley Fool
"There are many high-quality books on technology markets and many on finan-cial markets. However, The Gorilla Game is the first book to accurately bridge both disciplines. The combination is potent. Do not invest in tech stocks with-out reading The Gorilla Game." -- Bill Gurley, partner, Benchmark Capital
"This new book is a must-read for growth investors...These authors bring to the game an unusual combination of credentials--practical and successful investing, academic experience, and consulting work with some of the largest tech firms. So they have been able to summarize and explain the essence of technology investing better than any other attempt we have seen." -- Smart Money
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I myself have a value investing bias so never quite "got" the outrageous valuations of tech companies. This book definitely helped with clarifying the underlying "winner takes all" dynamic that drives forward valuations. It is not an investment book in the traditional sense but more of an industry analysis that can guide investment decisions.
I'm hoping for a revised edition. While the analysis hasn't changed, 1999 was quite awhile ago!
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.