There is no need for him to fill out his profile. You can tell the level of his knowledge and where his background doesn't lie by the context and content of his post. I don't , mean to seem arrogant (even though I am), but finance is indeed a science (there should be a financial engineering course offered at Harvard by now - they are joining MIT, NYU, Carnegie Mellon and NY Polytechnic in the addition of official curriculum). This science is in no way understood by the average lay person that does not take the time and the pains to learn it. Very smart people, higly educated and experienced, take a lot of time to compete for your capital (read take it). Does anyone on this thread really think they can beat them by reading First Call and posting on SI?
To begin with (again) you will be misled time and time again by astute management and savvy investors if you attempt to price a capital intensive company on earnings. Suppose their amortization schedule is different from the competitor you are comparing them too. Earnings numbers accuracy absolutely disappears (yes I will keep downing earnings methods until the novices learn how to count money). INTC can legally and ethically manipulate earnings reports by deferring revenue in reserves, amortization, and a long list of other accrual accounting tricks. When you do your taxes at the end of the year, do you attempt to report all of your "acounting earnings" on a straight forward basis, or do you attempt to use all types of accrual accouting tricks to achieve deductions, credits etc. Well if you do (not you Kam, "you" is generic - I am realy referring to the Michael guy), chances are that a lot of others do too, well heeled companies included. Do the math.
Secondly, market psychology and institutional traders ONLY have the ability to affect well capitalized companies shares for the short term, PERIOD. No market maker or any one else has the capital to manipulate INTC over any significant period of time and come out of the ordeal intact (via trading). Count the money, 150 billion (or whatever) dollars in market capitalization and you think that some man (or woman) is going to casually trade/affect this stock's entire float in one direction or the other? The richest man in the US only has 28 billion and his wealth is in stock, not cash. Think about how this will affect that man's wealth if he committed the capital necesary to affect INTC's share price, medium term through trading. Do the math.
My opinion on whisper numbers.... Who gives a damn. They affect the stocks price infitessimally, if that much over the true investor's horizon. For one, earnings don't count. Secondly, even if they did, the earnings numbers for the next quarter would not be enough to have a signifcant effect on the price of the stock unless there was a BIG swing in volatility. Stocks are priced by capitalizing cash flow (or if you want to be a amateur or misguided laymen, accounting earnings). In order to do that, you must project the cash flow out XX number of years (like ten), then discount them back using an appropriate discount rate such as the companies cost of capital. In lay terms, this is anlagous to pricing a life insurance annuity without the mortality (death benefit) costs. Now, if you are discounting the ten year projection of cash flows (or even five, or three) to arrive at the current price of a stock, exactly how SIGNIFICANT do you think the NEXT THREE MONTHS contribution will be to the stock price. To put it another way, if I were an insurance salesman, and I knocked on your door selling variable annuities promising XX dollars in future cash flow. Would you allow me to price it by accepting the cash flow from the next three moths or would you want (NEED) to know the expected cash flows for the next decade? If it was a ten year annuity, and the payments started today, would you be any where near as concerned about the next three months as you would the next three to ten years? If you are then you are a fool and deserve whatever the guy sold you (the same goes for the losses you take in the stock market). Now, suppose you bought the annuity, should you be nearly as concerned with what the salesmans computer printed projections state (if you have ever been visisted by a Prudential guy, you know what i am talking about), or is your real concern the actaul CASH that will be thrown off by the annuity. If it is the cash that is your concern, and not accouting numbers strewn across a spreadsheet, then you should alter the way you invest in stocks (or maybe not since this is not a science, I suppose electircal engineering is not a science either, simply because work is done basedoff of assumtions and your average layperson does not understand the methodology and theories behind the work by simply following First Call and posting to SI).
I have a lot of examples, such as buying a business based on the next three months cash flow, instead of the next ten years and then finding out you got robbed. Or buying the business based onaccounting profit to find out that he nakes 1 million dollars of accounting profit, but only $200,000 in cash profits (you can;t spends accoutnign profits, or earngins - the last time I checked, cashiers take cash).
Nuff ranting, I just decided I would attempt to set the record straight concering this gamble nonsense. I suffered through all of last week pricing fixed for floating hedges and swaps with embedded digital, binary and lookback options using math from Mars (I hate math), to get up at 5a.m. in the morning on a Sunday just to finish the proposal by Monday for the client - to find some Neophyte calling all of my hard work a "gamble",,,,,, I just had to vent. Sorry about that Kam.
PS. Don't bother to tell anybody to fill out thier profile, it is irrelavant. If they are of the character to post false or ignorant information, they are most likely of the character to falsify the profile. My profile isn't filled out, should I be excised from this thread? |
