Rules for Technology Stock Investing (GS - Dan Benton)

Yesterday I stumbled across a page from a Goldman Sachs Investment Research Report containing Dan Benton's Rules for Technology Stock Investing

From what I can tell this was picked out of an older report.  If my sleuthing is accurate, Dan Benton was a top-ranked PC analyst at GS from 1988 to 1993.  From there he went to work at Dawson Samberg Capital Management which eventually became Pequot Capital Management.  I recall representatives of Pequot showing up on a few panel discussions I moderated when I was active with SEMI.  After Pequot, Mr. Benton founded Andor Capital Management.  Andor operates a long/short hedge fund.  

Suffice to say the history of Andor is interesting - it appears as though they shutdown in '08 and then reopened in '11.  This year it looks like the sailing has been rough.  Here's a link to a story from the WSJ:  Andor Capital Management fell 18% in March  A quick perusal of the news shows that Andor likes Tesla and Twitter....  FWIW

One thing about hedge funds seems overwhelmingly clear, they never seem to die - they open and close just like window shades (unless they are busted for violating the rules).

So, about those Rules.  The first six deal with Momentum. Rules 7 and 8 address Valuation. 9, 10 and 11 speak to Seasonality. 12 through 15 addresses Management.

1. SELL TECHNOLOGY STOCKS WHEN ESTIMATES ARE BEING REDUCED
2. Buy technology stocks ONLY FOR POSITIVE EARNINGS SURPRISES
3. Positive earnings surprises occur when revenue and earnings growth are accelerating, when AVERAGE SELLING PRICES ARE RISING, and when gross margin and operating margin are rising.
4. Most technology stock ideas are product-cycle stories.
5. New product cycles often lead to earnings surprises; product cycle transitions usually lead earnings disappointments.
6. Technology stocks also do well when COMPANIES REBOUND FROM POOR EXECUTION.
7. Value investors don't make money in technology. There are few "cheap" technology stocks.
8. Don't buy on relative P/E, P/B, P/R, particularly when estimates are falling (see Rules 1 & 2).
9. Technology stocks perform poorly in the summer.
10. Seasonal slowdowns cause secular concerns.
11. SECOND-TIER COMPANIES DO POOREST IN THE WEAKEST SEASONAL PERIOD AND PROVIDE ANECTDOTAL EVIDENCE OF A SECULAR SLOWDOWN.
12. Reorganizations without restructuring charges usually lead to earnings disappointments within two quarters.
13. One quarter problems exist (but only if caused by supply constraints).
14. Management usually appears weakest at the bottom of a product cycle.
15. Insider selling doesn't matter; management gets new stock options every year.

Here's the actual image of the page (click it for a larger view):
  

Discussion is welcome and expected.