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

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!