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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: pezz who wrote (4852)	6/12/2001 8:21:39 AM
From: Stock Farmer	Read Replies (1) \| Respond to of 74559

Pezz: >>I buy little pieces of paper that I think I can sell for higher later<< Which is to say that you are speculating. Merely by definition, if not by intent. I do not think this is "gambling", and I am well clued into how this can be done with great effect... having done so with mucho gusto myself. Indeed, those of us who are impatient and petulant rarely have the stomach for investing per. se. It is boring and takes much careful homework. Much more exciting to try to be out in front of the thinking of the masses and identifying those pieces of paper or glowings of phosphor or combinations of letters that will be worth a different amount in the not too distant future. Quite a rush of adrenaline and good for the ego and the wallet to be right. You said it yourself: >>This is not about finding good companies but stocks that go up in price<< Which is precisely what separates "investing" from "speculating". Take a company like "square-wheels-r-us". A terrible business model in the real world, but some bright spark observes that geometry is not important on the web. Our founder throws together a hasty powerpoint package, hammers out a prototype, and uses "first mover" advantage to corner the online market for non-round wheels. Realizing the potential to use this unassailable beach-head to penetrate the absolutely massive wheel market, his VC's force him to drop the "square" for the time being and add ".com".... you get the picture. We have seen how those little pieces of paper can become quite pricey despite the abysmal treatment of capital that is going on below. There are viable strategies to benefit on the way up, and on the way down. One can use these strategies to get rich quick. But none of them should be confused with "investing". The key distinction is between "stock price" and "harvesting of capital". It's not about PE. I have "Invested" in companies with PE in hundreds (I hold some where "PE" has been infinite for more than six months, now very negative). Also in companies with pathetic low PEs. It's not about EPS either. It's about growth of capital, which springs from cash flow, the sources thereof and its subsequent distribution. I have no difficulty with your strategy milking J6P from astride the supply / demand curve of little pieces of paper. I also recognize it as one amongst many ways of separating fools from their money. There are multiple strategies here. But they are not "investing" strategies. They are "speculative" strategies. I just like to call something by its proper name. John.