l'union fait la force
Investment Related Discussions....

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By TheSandman
February 12, 2001

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Every once in awhile I make my way to this board.... in "Lurker" mode only. So, if I'm now stepping in where I'm not wanted, I apologize. However, I felt the need to say something about the debate that seems to be going on between PhoolishPhilip and TinkerShaw.

I will admit, right up front, that I have only read a few posts in this thread. I don't know the details, but I think I get the gist.

Here's my take: Investment related discussions always seem to break down when the people involved fail to recognize that each person presents with a different "circle of competence".

Obviously, there are a wide variety of investment styles you could choose to employ. Who's to say that one is superior to the other. In my mind, the best investment style for you to use.... is the one that you are most comfortable with.

People tend to get hung up on the fact that not everyone sees the world exactly the same way that you do. Personally, I'm happy that we have differences of opinions. That's what makes a market, that's what brings financial opportunities your way, and that's what expands your mind.... IF you are willing to listen. For example, the primary reason that I come to this board is to see what Doug and Lee have to say. I have never invested in a single company (except CSCO in ~'95) that the l'union port has invested in. However, these guys do help me to look at the investment world from a different angle than I'm used to. And, you certainly can't argue with their success. I can learn from them.

I believe PhoolishPhilip and TinkerShaw are at odds due to the fact that they each have a different circle of competence. TinkerShaw feels as if he understands the technology industry well enough to be able to project who the winners will be, and why they will be winners.

If TinkerShaw has had success with his choice for investments, I think that's great and I wish him continued success.

PhoolishPhilip feels as if, whether Tinker recognizes it or not, any investment in the technology industry is nothing more than speculation. I assume that PhoolishPhilip's primary argument here is that there are very few technology companies that have a clearly identifiable sustainable competitive advantage.

I have to admit, I agree with PhoolishPhilip on this issue. I'm much more comfortable with my discounted cash flow analysis on Moody's (MCO), for example, than I would be with most technology companies. Reason being, I'm comfortable with MCO's sustainable competitive advantage (SCA). Once I have identified a company with a SCA, and I'm comfortable with management, all that's left is determining a fair price to pay.

I don't think it's important to have a big circle of competence. In an investor's lifetime, they don't need to own very many companies in order to do very well in the market. However, I do think that it is absolutely crucial to understand the boundaries of your own personal circle of competence. I also believe that, if you want to carry on a meaningful investment related discussion, you have to allow the other person to work within their own personal circle of competence. Once you try to persuade them that they are wrong, because they don't agree with you, the conversation will usually take a turn for the worse. Everyone loses in that scenario.

Again, I apologize if I stepped in where I am not welcome. I hope that you guys are able to resolve this quickly. You have a good group of people here.

Good Luck,