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.

Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: SouthFloridaGuy who wrote (45987)	1/4/2001 11:06:05 AM
From: The Phoenix	Respond to of 77400

SO, That article was written when? I'm still reading but found this paragraph a little humorous. The most obvious effect of the stock market bubble has been the decline in national savings due to the wealth effect. It is generally accepted that every dollar of wealth in the stock market generates 3-4 cents of additional consumption. According to standard economic theory, this additional consumption crowds out investment and net exports in exactly the same way as a government budget deficit would. A simple extrapolation implies that the consumption induced by the bubble has crowded out between $460 -$960 billion of both investment and net exports over the last six years. At present, the additional consumption attributable to the bubble is having the same negative effect on national savings as a $320 billion budget deficit. They're saying that wealth generated by the stock market is being spent at the rate of 3-4 cents on the dollar for each dollar "created" in the market. They go on to assume that since these funds are being spent it's a net "loss to S/I"? Hey, guess what... these funds would not even exist if consumers werent' invested. It's a moot point. If investors don't invest you don't have consumption of 3-4 cents for each dollar and you don't have the additional savings anyway. Either way you don't have the increase in savings. I think this argument is baseless.... ... on to read more... OG

To: SouthFloridaGuy who wrote (45987)	1/4/2001 11:12:06 AM
From: The Phoenix	Read Replies (1) \| Respond to of 77400

More.. A second potentially large cost associated with the bubble is the effect of misperceptions of the value of the real wage. There are two ways in which the bubble can cause misperceptions. Many higher paid workers, particularly in the high tech sector, are receiving a substantial portion of their compensation in the form of stock options. This must be an old article. Very very few high tech workers I know rely on stock options as a form of compensation. They look at options as a perk. Wages are still comensurate with the job. In the high tech field wages are significantly higher than in other sectors - again due to a low supply of workers. The assumption that compenstation from stock options is a crtical component of wages is flawed I believe. I can't read anymore.... this article is based on hot air... nice try. OG

To: SouthFloridaGuy who wrote (45987)	1/4/2001 11:15:48 AM
From: The Phoenix	Respond to of 77400

SO, Do you see what's wrong with this thinking??? Think about it.... With the current price to earnings ratio, dividend yields (including share buybacks) are approximately 2.0 percent of share prices. Inflation indexed government bonds are providing a 4.0 percent real return. This means that to provide the historic 4.0 percentage point premium over bonds, real share prices would have to rise by 6.0 percent annually. Unless the price to earnings ratio grows still more (leading to an even more over-valued market), profits would have to grow at the rate of 6.0 percent annually, in real terms.