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Technology Stocks : Applied Materials No-Politics Thread (AMAT)
AMAT 230.89+3.1%3:59 PM EST
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To: Proud_Infidel who wrote (10196)6/6/2004 3:19:24 PM
From: Big Bucks  Read Replies (2) of 25522
 
Brian, "But simply splitting the stock does not in any way dilute. If you and I each have 1000 shares and the stock is split, we each have 2000 shares, and the exact same percentage ownership of the company as we had before. So I ask again, how is this in any way dilutive?"

Good and fair question..... In order for a stock to increase in value there must be buying demand.....someone
must be willing to pay more for the stock after you
have purchased it. This requires either the same buyers
to increase their stock position or for new buyers to
enter the market. In either case there must be some
justification of a potential profit motive which is the incentive for buying the stock.

Would I buy microsoft as a long term buy and hold, not likely....why? Because, even though it has great margins, products, market dominance, etc., it is in a mature and relatively saturated market....growth rate is slowing. It takes a lot of profit to move the price up due to the amount of shares available. The stock becomes sluggish like a beached whale, it flounders around but doesn't move
much. Because of it's size (outstanding stock) it
loses its' mobility.... I don't want to try to move a
beached whale, eventually they die under their own weight
and begin to stink driving everyone away... BB
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