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Technology Stocks : Aware, Inc. - Hot or cold IPO? -- Ignore unavailable to you. Want to Upgrade?

To: Scrapps who wrote (8061)	3/10/2000 7:29:00 AM
From: Jess Beltz	Read Replies (2) \| Respond to of 9236

I think we may want to reevaluate the role of analysts in this situation. Let's remember that they work (usually) for large investment houses. These firms make money NOT off of the positions they hold, but by buying and selling the stock of other people, their clients. I would bet commissions make up the vast bulk of their revenues. Now consider a stock like Aware. (1) There's some kind of cloud now about the potential of the company. If the analyst were to come right out and take a definitive stand in support of the stock, remember there is some risk (since they really don't know much more than we do). Suppose they remain silent, however. (2) They (the house) can move some of their people out of the stock: "It looks pretty risky right now, and we've made good money in it. Let's take some of these profits and run." They sell a bunch of relatively happy people out of the stock (they did make money after all) and make money on every transaction. (3) The share price wanders down under the selling pressure. Now, since the stock has been relatively 'beaten up' it looks a bit more like a bargain again, and now the analyst can reaffirm his buy rating, and the investment house can move new people (and even some of the old longs) back into the stock as the uncertainty clears, and guess what? that's right, they make more money on each new transaction. That is, if they definitely supported the stock all the way through, there wouldn't be near the action in it. All of that action represents lots of pennies on the floor to be picked up by those who make their livings (and very handsome ones too) off of those pennies. jess.