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Strategies & Market Trends : ZenWarrior's Trading Paradise -- Ignore unavailable to you. Want to Upgrade?

To: p40warhawk who wrote (331)	4/3/2001 5:36:19 PM
From: iowamann, Spam Queen	Respond to of 2462

P40, here's a good analogy. Let's say the Post Office comes out with a stamp. People buy it at face value. Later on that stamp may increase in value. You bought it for 34 cents. I say I'll give you a dollar for it. You get the dollar. The post office doesn't benefit from our trade. Then I sell it to Zen for two dollars. I get the money. Again, the post office doesn't benefit. Zen tries to sell to MFN for two dollars but MFN only pays 1.50. Zen lost, and the Post office wasn't impacted. Sure, a company cares about a stock because they keep some in reserver. If you and I bid it up out here in the market, their stock rises with the value. They often use it as currency in stock deals. And you're right, your stock gives you a voice in the company. But unless you are Warren Buffet, you will never have enough shares for it to mean anything. And when a company goes bankrupt, don't count on your shares to mean anything.

To: p40warhawk who wrote (331)	4/3/2001 6:29:49 PM
From: manfmnantucket	Read Replies (1) \| Respond to of 2462

>They can buy it back and put it out at their discretion, but don't they SELL the stock to the market makers no! That only happens at the Initial Public Offering, or perhaps if they register for a Secondary direct offering. All else is just the secondary market. If a stock is widely traded, there is a potential for the company to register and sell a bit more to get money. AETH did this with great elan at its peak, to reel in $1B cash - since its initial IPO brought in far less, and the stock was bid up to extreme heights of $300, or tens of billions in valuation. Stock is also a currency they can use to buy other companies. That, and the personal wealth of the officers who hold shares, are the reasons they like higher prices. The notion that a company is "worth" its stock price times the number of outstanding shares is a fiction, a confection, a rule of thumb to use for speculation. Think - what would happen if the company suddenly decided to sell all its shares at that current price...? the price would go to zero. Consider - if there were no other buyers and sellers, you and I alone could agree to trade CMGI back up to $200 with just 100 shares... does that mean the company would really be worth 100x what it is now? nope. >"What CAUSES those directions? The weather?" Many things. Weather/seasons - i.e., tax selling. Economic cycles. International tensions. As to the notion that shorts profit from others' loss - ??? I could just as easily say that longs are bad because they profit when shorts lose. But then, even if no short trades were allowed, some longs profit at the expense of others who sell at a loss - that's the way it has to be; it's not like prices go up infinitely by majik and everyone profits...?? >Have I been a riverboat gambler for forty years?????? what were you thinking? MfN