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Technology Stocks : Global Crossing - GX (formerly GBLX) -- Ignore unavailable to you. Want to Upgrade?

To: DukeCrow who wrote (12781)	7/26/2001 5:27:55 AM
From: HW Bowman	Read Replies (1) \| Respond to of 15615

You might be right again. Efficient market theory? You have to be kidding. This thing is at less than 1/3 book value, with undiminished LT prospects. Easy money here. GX love.

To: DukeCrow who wrote (12781)	7/26/2001 6:39:52 AM
From: CF Rebel	Read Replies (1) \| Respond to of 15615

Duke, <<You seem to believe in the "efficient-market" theory - whatever the market thinks is right and has no costs.>> "Huh? I have no idea where you came up with that. I am a firm believer that capital markets, while efficient in some respects, are always littered with examples of inefficiency." I came up with it in your post that I was replying to where you said, with respect to stock prices having effects on a company's business, "Any damage done to the company isn't real but imagined." What was implicit in my post is that there is some normal/nominal level of volatility in the markets. However, at some point excessive volatility to the downside can do the kind of psychological damage which has real effects. Sure, the financials and prospects of the company may look good to some at the time, but insidious effects can come from the psychological fallout rather than the facts of the business itself. First step, as said before, is the ability of the stock price to cut short funding activities that would be financially sound - except that the stock price (which is artificially low, having been forced down by excessive shorting) forces management to choose between pursuing normal business and stopping further investment due to the excessive dilution that excessive shorting forces. Something learned back in the 1930's was how important confidence and investor psychology is to the markets. There is some subjective normal range for negative and positive psychology and it's parallel of market prices. Beyond that normal range, negative psychology can damage the participants in the capital markets to the point of causing an unnecessary depression. Confidence is a human trait that requires repect, not abuse, especially in the capital markets. This is not to say that companies with unsound business plans should be supported. They should be allowed to naturally wither and die. All of the foregoing is argued with respect to the effects of unusual levels of shorting. GX's business is sound in my opinion but I am watchful of the effect the artificially depressed price has on the company's plans going forward. Like you, I don't mind volatility and have a cast iron stomach for it. But I don't like seeing a loophole like shorting unnecessarily destroying the execution of rational business and the confidence of market participants. The 1930's should have been a lesson in that. The coming Q2 report will probably see one-time write-downs to get them out of the way. If management reduces revenue guidance, it won't be surprising to see the stock take it on the chin. I think EBITDA will be met regardless of revenues and the market will not consider the positive of GX's increasing market share. My confidence in the business plan, whatever happens, remains undeterred. CF Rebel