It doesn't seem like a fair fight. In one corner you have the mighty Intel
Consumers welcome the spectacle of two quality players duking it out in a market, since that keeps prices reasonable. And investors have to appreciate AMD's tenacity. How is it able to excel when logic would dictate that the company should have been supper by now?
Just as the Florida Marlins were able to win last week's World Series with unflinching focus -- despite lacking the financial stature of the New York Yankees -- AMD has been able to keep its eye on the prize by sticking to the task at hand. While Intel has gone on to diversify in everything from software to consumer products, AMD has followed the Keebler elf mantra of making chips.
Buying David over Goliath
Last year I suggested Buying David Over Goliath. My logic was, and remains, simple: Goliaths aren't born. They are shaped. They are transformed. Just about every Goliath started out as a David, rattling the foundation with courage. You want to buy the biggest? Go for it, but if there is a pesky upstart with promise clawing away, why risk the carnage? All of the pressure and the greater distance to fall belong to the Goliaths.
A year ago Blockbuster
How many blue chips subscribe to the David Wells school of conditioning, banking more on reputation than on a fitness regimen? How many large caps pull up lame in the clutch as Jason Giambi did -- hobbled when it mattered the most? Wouldn't you rather buy into the Jean Pierres of the world who can nickel and dime their way on first and then wreak havoc all around the bases? Why not back the Josh Becketts who stand unproven on the big stage's mound, yet do so by dismissing any semblance of intimidation?
Didn't watch the Series? OK, let's put it in business terms. How could Sears
Top-down upside down
Show me a company that doesn't feel vulnerable and I'll be there to scribe famous last words. Show me a company that thinks it will always own the competition and I'll bring the history book that claims otherwise.
Of course, the argument against this is that it takes confidence and some degree of swagger to battle to the top. I agree. You don't want to buy into a company that's in shoe-gazer mode, letting out the occasional "Aw, schucks" during its quarterly conference call. But if the company that was cocky all the way up the market-share ladder isn't smart enough to recognize those same traits in its rivals or to privately assess its own shortcomings, look out below.
If I'm allowed an alternative definition for top-down investing, let it be that one should always start the analysis by looking at market leaders but then singling out the small competitors that are difficult to swat. If an upstart has a unique advantage or is already nibbling away at market share, turn your attention that way.
State of the heart
The media has been ripping into the Yankees over the past few days. They lacked the heart of the Marlins, say the pundits. What's amusing is that those very writers fell for it, too. That's why they are just as shocked and outraged as you are that a team with a payroll in the ballpark of $50 million can take three straight games from the $160 million Yanks. For the record, I was writing about the Marlins and their winning approach four weeks ago. But, hey, I don't claim to be a visionary. I certainly wasn't on the bandwagon of my local team until the late-season run.
Yet I do recognize, and will always remove my hat and bow, when innovation and hunger walk into a room holding hands. Unlike arrogance and gravity, that's one couple that bears watching closely. That's the pairing that ultimately wins it all, until the next ready party fills those very same shoes.
Rick Aristotle Munarriz lives in Miami and is a Marlins fan with the Game Five ticket stub to prove it -- yet his heart goes out to the Chicago Cubs and Boston Red Sox. He owns shares of Netflix. Rick's stock holdings can be viewed online, as can the Fool's disclosure policy.
