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Technology Stocks : Dell Technologies Inc.

DELL 127.22

+3.8%

Nov 24 3:59 PM EST

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To: Chuzzlewit who wrote (72665)	10/20/1998 1:47:00 PM
From: Paul Merriwether	Read Replies (1) of 176387

<< Nope! That's exactly how it's done. A company is worth exactly what a willing buyer and a willing seller agree it's worth. Just like a house or a used car. The problems with calculating "intrinsic value" are monumental. >> No disrespect intended but this is ridiculous. The problem with this "relativistic/trendy" way of establishing worth is that the answer is not deterministic. Why do we think that the "Tulip mania" a few hundred years ago was mass hysteria? People weren't enamored by the beauty of tulips but rather thought that it was lucrative/profitable to keep buy tulips at any price. Big crash! Now the examples you gave of (hopelessness of) evaluating the intrinsic value of art is a nonsequitur. A for-profit company's stock certificates is not art. You don't derive any pleasure out of looking at a certificate(unlike looking at a statuette or a picasso). In addition renoir, da-vinci, monet are all dead, and michael dell is very much alive and issues 4 times as many certificates every year! Different people may assign different price to works of art based on the level of appreciation/hopes that others may assign a higher price in future based on uniqueness and aesthetics. Is it rational to evaluate a publicly traded company the same way? Similar rebuttal applies to your real-estate example. You can derive utility out of living in a upscale neighbourhood -- better schools, services, classy address etc. On the other hand, owning stock certificates is a direct relationship between you and a broker. There is no utility in owning the certificates EXCEPT what you expect the underlying security to yield in terms of earnings(although some additional utility may be obtained by their "bragging rights to owning dell"/selling a million naked calls on dell etc. ;-) ). I was not benchmarking the stock against "historic sales". Rather, I was projecting a 50% growth rate for the next 7 years(quite generous imo unless you disagree) and comparing the earnings against average returns in a moneyy market @5.5% for 7 years. If you take that as a measure, Dell is not such a great investment at least over a 7 year horizon.

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