POST OF THE DAY
Juniper Networks
JNPR & JoeTheBat

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By BruceBrown
January 29, 2001

Posts selected for this feature rarely stand alone. They are usually a part of an ongoing thread, and are out of context when presented here. The material should be read in that light. How are these posts selected? Click here to find out and nominate a post yourself!

Grinch/JonT27 wrote:

...untill then, who could ever take YOU SERIOUS
you owe an apology to anyone who bought based
on you bullishness......complete disrespect for
other peoples money....


In my presentation of the Fat Pipe Series [Part 1, Part 2, Part 3] last year, the aggregate group of 36 companies that I talked about to date and have been tracking since August 23, 2000 in the Fat Pipe portfolio are down 33.5%. Yes, that's a lot of money. One third in fact. There has been a lot of carnage since August 23rd of last year. Most likely a few years from now, that number will be well into the plus column as the companies execute and grow earnings as well as revenues over the years.

The series at no time mentioned that anything should be purchased. In fact, the original idea of the five part series was in hopes that we could find maybe one or two candidates from the whole batch of 36+ companies under review that might appear to be interesting considerations as a long term investments in the entire IP/Broadband segment. The last two installments dealing with fiber optic components, optical networking, IC/Communication semiconductors and network applications haven't even been posted yet, so the process of finding one or two top candidates out of 55 some odd companies hasn't even been completed.

Juniper happened to be one of the stocks in that Fat Pipe series (it was in the Fat Pipe #1 post dealing with the IP core). Since August 23, 2000 when the series began - Juniper is down 26.2%. Yes, that's big money as well. However, in terms of the technology adoption life cycle for the IP/Broadband space, it is still nearer the early part of the cycle than it is the end part of the cycle. Whether Juniper the stock is trading at $33, $89, $105, $135, $231 or $244 - it doesn't alter my enthusiasm for the company and their position within their respective 'game' over the longer haul of the cycle. That goes for many other companies as well.

The fluctuation in stock prices is a given. Your method of 'investing' is designed around taking advantage of those fluctuations. You mentioned on the Brocade board that all your efforts last week of being in and out and in and out, short and long, long and short yielded $600 dollars for you. There are many posters on that board who studied the fibre channel, SAN and NAS spaces in the early days who have seen their original money grow into quite a large sum of money with one purchase. Both methods require work and discipline to execute. I would imagine that had I shared my Fat Pipe series in the summer of 1999, it would have been more beneficial. However, the point was to illustrate how particular games in technology revolving around standards, de facto market segment products and companies involved play out. If you look at the original 'test' portfolio of The Gorilla Game that the authors presented:

http://www.siliconinvestor.com/portfolio/detail.gsp?pid=9240114

even if one had held the 'losers' to date, the aggregate group is up 525% after a little over three years. Maybe that's nothing to write home about for some people, but it allowed investors to capture a couple of young winners (Checkpoint and i2) while also holding some grandfather gorillas like Cisco, Intel and Microsoft. The purchase of Netscape by AOL allowed the game between Netscape and Microsoft to turn out to be another winner in the overall 'basket'.

The fibre channel thread at Silicon Investor has been tracking the fibre channel/SAN/NAS space since October of 1997. Brocade was added to the 'basket' on the day of the IPO. The original basket has been trimmed down - as of last week - to a final 9 companies: Brocade, Inrange, QLogic, McData, Network Appliance, Emulex, EMC, Storage Networks and Veritas Software. If you look at the aggregate gain from those companies since October 16, 1997 - it speaks to what the discipline and effort can offer in term of rewards for studying baskets of stocks involved in specific technology 'games'. Time will tell what the IP core game yields investors who researched, studied and invested in a basket over the years. If there is disrespect in my presentation of that material in an attempt to help fellow Fools understand how things might progress or work in technology investing - then so be it. I'm guilty of disrespect.

If one is interested in technology investing for the longer term with the desire to capture one or a few of the winners, it takes time to build a portfolio basket and for the leading companies to grow into dominant franchises. This process - which takes time - allows an investor to enjoy the rewards of being a long-term investor as the technology adoption life cycle progresses. Some of the younger companies that have emerged in the past few years like Checkpoint Software, i2 Technologies, Siebel Systems, Brocade Communications, Emulex, Network Appliance, Juniper Networks, Ciena, Veritas, Qualcomm, BEA Systems, etc... are the types of companies that investors look for in the very early going. Just as companies like Oracle, Microsoft, Cisco, Intel, Dell, AOL, Applied Materials emerged in a previous generation and have rewarded investors that were looking in the early going. There are younger companies than those mentioned above that are earlier in their cycle, which some investors are aware of and investing in at this point in order to capture the winner(s).

As I mentioned, my Fat Pipe series was simply an attempt to share with some fellow Fools how one should go about looking at the games (gorilla and royalty gaming) within various segments of technology to see how broken problems are addressed and fixes are provided by technology companies that crop up to 'attack' a niche. From each of those games, there will be a winner or two that emerge and dominate. Plenty on these boards are familiar with concepts found within The Gorilla Game, Inside the Tornado, Crossing the Chasm, Fault Line, Innovator's Dilemma, etc... . However, some are not familiar and think a tech stock is a tech stock. Excite@Home should do as well as America Online. Or Bookham should be as solid of an investment as JDS Uniphase. Or Vixel and Lucent should perform the same as Brocade and Cisco.

I doubt if you'll ever find any evidence of me telling anyone to buy a specific stock on a message board. Don't confuse enthusiasm for a sector, a niche or a company that I happen to be invested in as being 'complete disrespect for other people's money' - as you wrote it. I'd be just as happy to chat with you about Harley Davidson, Reuters, Safeway, General Electric, Cardinal Health, Pfizer, Southwest Airlines, bank stocks and REIT's - all of which receive equal enthusiasm from me in my own investing.

My comments aimed in your direction were concerned with your vulgar use of language on some message boards. You don't do it here, because you would not be allowed to post. Yet, it remains disrespectful no matter what the venue is. In terms of the use of aliases, that's your cup of tea. I would rather be disrespectful for presenting some thought processes to other investors so they can step back and view the larger picture of who the high technology investing field functions.

BB