Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: gnuman who wrote (65126)	7/23/1999 8:42:00 PM
From: Knighty Tin	Respond to of 132070

Gene, Got enough questions there? <g> You cannot support current valuations with current eps or cash flow, so you have to make acquisitions to muddy the waters. For example, Merck reported eps up 15%. That is great. Merck is a truly wonderful co. that has paid dividends since the Earth was cooling. But in no way is 15% growth and a 1.5% dividend yield worth 32 times eps. Merck knows this, but they aren't crooks, so they only make acquisitions that make sense. Other cos. are not as good as Merck and have even higher valuations, so they have to do buyouts to try to pretend they are really somehow worth much more than they are really worth. So far, the suckers are buying into it just like they did with conglomerates. Ah, I have experience with a good co. being bought out by a crappy co. I once owned a terrific small cap tech stock called Spectra Physics. It was bought out by Thermo Instruments. THI did fine for a while, then it hit a slick spot in the road and it turned out to be a rickety thrown together bungalow of a co. with extremely high mfg. costs relative to the competition. Fortunately, we have yet to see BK and I was able to escape THI with my hide intact, but I miss my good little co. My bet is that the shareholders who haven't voted with their feet are going to get killed. An analyst who has an obligation for investors rather than the cos. they make markets for are known collectively as former analysts. The investor is responsible for his own education and "caveat emptor" is the rule of the investment world. Along with "ex post facto, we don't gotta show you no steenkeeng factos." Imho, prices go down big time because the world is awash with capacity. US mfg. capacity hovers in the low 70% area while investment in new plant and equipment languishes. This is not a price raising environment. Prices go down, wages go down, the market goes down.