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Technology Stocks : VALENCE TECHNOLOGY (VLNC) -- Ignore unavailable to you. Want to Upgrade?

To: MGV who wrote (13030)	7/12/1999 5:41:00 PM
From: DKR	Respond to of 27311

1.) My comments are specific to Valence. 2.)I did not suggest that specific risk could not be diversified. 3.)I stand by my premise that there is only one kind of measurable, meaningful risk (that applies to VLNC) and that is systematic risk. 4.)The term "risk" is defined by an ability to assign meaningful probabilities to particular outcomes. "Uncertainty" is the accurate description (and I have not suggested that VLNC's future is certain, or predictable). 5.) I believe that expected returns within an asset class (microcaps) are random. If I am wrong then it would be possible to rank microcaps by expected return. If you were capable of doing that with accuracy (without utilizing hindsight) you wouldn't be posting here, nor I. There is no relationship between risk and "expected return" in this example because it is impossible to assign probabilities to potential outcomes in a credible way, thus we default to the expected return on the market or asset class. The expected return on VLNC could only be equal to the expected return on other microcaps, an increase in the holding of one over another would not change the expected return. 6.) I am suggesting that the expected return on all microcaps is the same. The decision to buy one over the other is made by purely subjective quality analysis. 7.) If I am wrong, you would be able to forecast an expected return on VLNC that is not completely subjective. 8.) After reading my previous post, I agree that I erroneously implied that beta was a measure of unsystematic risk.