Amy: re premium and Greater Fool
1) The bid was substantially higher than the previous close. That makes it a premium to the market, by definition.
2) Actually, I think I understood your point - it's just that I totally disagree. Rising stock prices create opportunity - for those investors who already hold the stock and intend to sell it. Once the shares get above their intrinsic value (and we could start a long thread on how we go about determining that), the opportunity shifts from investors to traders, who are dependent upon someone else willing to pay an even higher level above the intrinsic value (hence the term "Greater Fool", which was not meant as a derogatory statement about your claim). As the bull market ages, the "opportunity" is, in my opinion, a well-disguised increase in risk.
...This attitude reflects my conservatism and does, at times, interfere with maximizing returns; after all, if one is extremely "skilled" (or extremely lucky), it is possible to lock in generous profits during a blow-off stage of a run. This is the underlying concept of momentum investing, and several money managers have built up substantial asset bases by exploiting it. However, it's just not my style - I'm much more comfortable advocating purchase of what I believe to be good value and then waiting for it to be recognized at what I believe are likely to be higher prices. And this is how I feel about AMD now, even on a risk-adjusted basis. - Tad LaFountain |
