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 : LSI Corporation -- Ignore unavailable to you. Want to Upgrade?

To: sea_biscuit who wrote (24112)	8/30/2001 2:49:14 PM
From: Andy M.	Read Replies (2) \| Respond to of 25814

Dipy, At the risk of dragging you back on topic, all of your talk of a general bear market seems somewhat misplaced here on the LSI thread. Despite a horrible market psychology (some capitulation is going on today) and the coming-true of all your predictions about LSI's drop from profitability into losses, LSI is still up about 50% off its lows. Good luck calling the absolute bottom on the market, but it seems you've missed it with LSI. Better to make money than be "right." As far as your general bear market comments go, by your reckoning since 1929 we've had about an equal number of bear market and bull market years. How then did the DOW manage to gain 9000 + over that time? The unambiguous buy signal you're waiting for will never come: the market has a way of making whatever buy and sell decisions we have to make into a bout with uncertainty that only seems clear in hindsight. Carpe diem, Dipy. It ain't "Buy lowest, sell highest"; it's "buy low, sell high." Andy

To: sea_biscuit who wrote (24112)	9/4/2001 1:00:10 PM
From: E. Graphs	Read Replies (1) \| Respond to of 25814

OT/ Dipy, Read: Ticker Tape Charade pimco.com >>...Lovett tracked the 20 most active stocks of 1901 and the 20 most active bonds and followed them through their ups and downs over the next 35 years – a period by the way, which included much more prosperity than economic calamity. Assuming all dividends and interest were spent when received as opposed to compounded (not a bad real life assumption these days outside of 401K land) Lovett found that the most popular stocks had shown a shrinkage of 39% in terms of market value over those 35 years while the bonds had lost 4%. Lovett writes: After having his capital at risk for 35 years of enormous industrial progress and national growth, our investor would show an aggregate loss of about 25 percent. And one out of four companies in the bond list as well as the stock list would have gone into bankruptcy. Grant then follows with his own corporate coup de grace. “The crux of (the argument) was that capital in capitalism is consumed, not conserved or compounded, (and) the fundamental reason for capital attrition is that businesses are mortal.” Cut to April of 2001. I couldn’t do a 35-year study of the most “popular” stocks in 1965, but I did find out that 1 of the 30 Dow stocks in ’65 did eventually go bankrupt (Johns Manville) while 10 have disappeared via acquisition. Since we haven’t had our depression yet and almost certainly won’t anytime soon, the corporate attrition Lovett warned about over our now modern period was almost undoubtedly less. Still, Lovett’s study (and even my modern update) was a reminder that corporations disappear and that holding a stock for the long-term can be dangerous. Doing a Rip Van Winkle on the likes of Cisco, Intel, Dell, or any other “popular” New Age Stock, then is not a strategy to be followed by the faint of heart or even the sound of mind. But there’s more here than Lovett pointed out and thank goodness for that. I can’t waste my poem pointing out what’s becoming obvious – that some popular companies go belly up. What I’d like to point out is that many companies and even some industries never wind up paying the investor much in the way of dividends even if they don’t disappear. And if you believe as I do (as well as most theorists and academics) that if a company never pays a dividend, or at least not much of one, that its stock price should approach zero rather than par, then much of what we call the stock market is really just a mirage. I called it a “smiling phantom” in my poem, but it just as easily could go by the name of Blanche Dubois in another figurative setting with the allusion that stock prices depend on the kindness and ultimate takeout by strangers. These overvalued companies and industries I refer to tend to occupy sectors that are capital dependent – so thirsty for capital, in fact, that they can’t return any of it to their stockholders. That thirst, in turn, is almost always ongoing, and nearly perpetual in nature. Still it’s not enough to criticize a company/industry because it needs money. That, after all, is why we have stocks in the first place. But if, due to constant innovation, these companies need more and more money to remain competitive or even stay alive, then stockholders are usually the last in line when it comes to receiving a dividend or a return on their investment. I call this phenomena “cigarette butt capitalism,” because with these companies, the cigars and fresh packs of smokes are used up by their “shadow” equity holders and indeed the ultimate consumers of the company’s product. Public stockholders are left with the butts....<< E