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

To: Don Lloyd who wrote (82734)	8/8/2000 4:50:52 AM
From: Bilow	Read Replies (1) \| Respond to of 132070

Hi Don Lloyd; I'm convinced that any differences we have regarding corporations and entities are semantics only. (Or possibly you were merely bear baiting.) I agree 100% with what you just wrote about the effects of employee stock options. I was at a company that allowed employees to convert their stock options into equivalent value shares of stock. That is, the company allowed them to avoid having to pony up the strike price by giving them a reduced number of shares outright, the number depending on the market price at the time. I suggested to the CFO that this wasn't wise, as the company could use all the cash it could get. He responded that since it was being done at the market price, the whole thing was a wash. (Some generalization of the efficient market hypothesis, I suppose.) To make a long story short, within 2 years the firm was bankrupt, having been unable to make a secondary offering. In this case, the CFO ignored what was advantageous for the corporation, by only paying attention to what was advantageous for the shareholders. The whole system stinks of overvaluation of shares. This was the big problem of the 20s. My favorite long term chart is a graph of corporate profits as a percent of GNP. The percent went very high in both the late 20s and now. People declared a new high plateau for stocks both times. -- Carl P.S. Re Titanic. No mistake implied, I just thought deck chairs was the natural continuation of life boats & desk chairs.