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

To: RetiredNow who wrote (52150)	4/26/2001 12:19:08 AM
From: Stock Farmer	Read Replies (1) \| Respond to of 77400

Why yes, a reverse split would do nicely. Not to mention it would be more friendly use of shareholder equity. Of course that 130 B$ of yours is now divided amongst 7.5 billion shares that used to be 15 billion shares "pre split"... so to reuse your math: for each $18 in today's money that you get in the future you pay 2x16 = $32 today. This competes with my little scheme of selling envelopes stuffed with ten $1 bills for $20 each... so I'll have to adjust my prices, but not by much. As for a discount rate greater than 10%? Yes. Indeed, one would make a strong argument to use the opportunity cost of capital as the discount rate. This is not a "CSCO vs T-bill" decision. It is CSCO vs a universe of alternative equities. S&P long term returns are about 11-12%, and coming out of a correction it is possible to see these returns slightly higher. Indeed, you were making a point about VC rate of return the other day. What return do you expect from a VC fund? You are a smart guy: CSCO vs VC fund? Where do you put a marginal dollar? So yes, Jay's short term numbers are reasonable. Now, you say 2003 you double your money. Hmmm... But that would be 4x more than your numbers show you you should expect. You are betting heavily against your own numbers on the greater fool theory. I don't place my chips that way. But the strange thing is you may actually be right. So as to July 2003: you're on. Gentleman's bet: winner will be able to afford to buy the loser dinner, and gloat all night long. Long and loud and in public. See you in two years. This is a bet I won't mind losing. 'Cause if I lose, then all of us with long positions in the market win. John.