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

To: Maurice Winn who wrote (12868)	1/7/2002 3:43:22 PM
From: Stock Farmer	Read Replies (6) \| Respond to of 74559

mq - curiouser and curiouser. The more I follow you down rabbit holes the more interesting tidbits emerge. Like your tax situation. Which is indeed strange if it is preferable to ride an investment down by 58% rather than sell. Care to explain? Not surprising you are up in arms about taxation and representation given the situation you (plural) have voted yourselves into down there ;o) But that might be tangential to our discussion of fool's gold. Or fools and gold. Or just gold (I seem to have got in trouble with some of my posting to you, so I am sensitive as to my choice of puns - but not so sensitive that I will avoid them). So fools and gold. >>Check posts per day in late 1999 and now to see the difference. Count the number of people posting. << Yes, there are fewer people excitedly posting about QCOM. Or MSFT or CSCO or or or... name it. Because the realization is dawning that unlike gold, the supply of greater fools willing to take these issues off the hands of current holders for riches beyond imagining is substantially less than demand would like it to be. Elasticity is inducing the appropriate effect on prices. But meanwhile we had a good number of folks who had grand plans of being smarter than some other greater fool that they could then point to. Which pointing along the way was taking place in considerable volume on SI and other bulletin boards, although always directed with positive spin, as in "look how smart I am" versus the equivalent "look how dumb he is" that is necessary to zero the sum. But that was then and this is now. And many now find themselves on the wrong and embarrassing end of that finger. And in the scurrying to get out of it's way, posting one's "success" is counter productive. So sure, volume is down. What else should we expect on the nether side of a bursting bubble? I suppose in the future you articulate we would call that hope that used to glimmer "cyber fools gold". But I fear to have stretched that metaphor too far already. Back to your post >>But the damn second coming for gold is sure taking a long time<< Agreed again. Yes, the second coming of Gold is not coming any second now. That's for sure. Of course, it's also not obvious that the third coming of CDMA (e.g. 3G [<ggg>]) that delivers untold billions of high margin revenue into Qualcomm will precede the second coming of gold to any appreciable extent either. Is it? >>I don't think the Q is just another fiat currency as you say<< Shall I try one more time to convince you? Because a share of a public company has value only by fiat, when you get right down to it. At least for those of us who can not afford to purchase a few hundred million shares of a company so that we can dictate the distribution of wealth from a position of control. Because it's not like the company can ever allow you to lay claim to the appropriate fraction a share represents. What do you expect, one some hundred millionth of the property, plant, equipment and intellectual property offset by the same some hundred millionth of the liabilities so associated? Nah... not while it's still running, that's for sure. A slice of the profit? What profit? The whole idea is to run these things tax efficiently. Which means to build the asset base without profits so that some day if the whole thing was dismantled you or your transitive successors would get the right slice of the goodies and meanwhile the good folks thus employed will get their just paychecks. Particularly for those non-dividend paying barely profitable concerns of which you are so fond. Instead, you are granted rights by law (um, that's where the word "fiat" comes from by the way) that merely approximate the value of this fractional ownership. And thus any intrinsic value that a share does represent is only by fiat. Which is the best you can hope for vis-a-vis some "intrinsic" value. And thus your Q as an aggregate of intrinsic value only by fiat is relegated to be amongst other fiat currencies. At best. At worst it merely another index stock as another poster so correctly pointed out. In the middle, the zone of reality, you have a negotiable currency. Indistinguishable from any other. Which is subject to the capricious whim of the market and while based in the full faith of the law on the one hand and full faith on different future rates of exchange on the other. In which case might as well keep score with pine cones or coconuts or nits or whatever happens to be locally in short supply. Electrons and opinions, unfortunately, are plentiful everywhere. And as to dilution? >>The dilution by issuing more shares is different from dilution by US$ bankers because shareholders print more shares and own those shares. Central bankers print more shares [$$] and THEY own the new money, not the holders of existing shares [$$]. << Either you are very wrong, or you didn't say what you meant. Sure, it's shareholders who hold the shares before and after a dilutive event. But the first shareholders are not the same as the second shareholders. Even though the collective pronoun for the two different groups remains the same. If YOU are a shareholder and the extra certificates don't show up in YOUR hand without YOU spending money so that YOUR share of ownership is not reduced, then YOU have been diluted. Who else gets the benefit is rather irrelevant, even though THEY become shareholders. Just like who gets the extra US $ as they roll off the presses is irrelevant if the amount in your pocket doesn't change but there's more of 'em sloshing around out there. >>and what's worse, you get diluted if you hold a fiat currency<< As if you hold a share of a public company you don't get diluted even moreso??? Upcoming reality check. A concrete example. I'm sure there are many notorious corporate villains and watered stock scams going out there, so we should use a company that is exemplary by your standards. How about QCOM? If you held 6,733 shares of QCOM in September 1997 you would have controlled a ten millipercent share of the company. If you held this ten millipercent share through September 2001 you would hold 53,864 shares today as a consequence of an 8-fold splitting between then and now. Which works out to only 7.1 millipercent. That is DILUTION by 29% in four and a quarter years. Uncle Al would have to step up dollar production quite considerably in order to match this prodigious pace. Ok, I'll give that the per share price has appreciated by so much between these two intervals as to make the 29% dilution less noticeable (absolute purchasing power when denominated in loaves of bread per share of QCOM have increased)... but don't kid yourself about the evils of dilution. And as to the increase in purchasing power, well the game isn't over yet, and the value of your slice exists only in the negotiated moment that you transfer ownership to a willing buyer, and not a second sooner. Not at all unlike gold or the US$ or gasoline for that matter. Anyway, while picking at your facts is fun, I must admit that I rarely pull out the folding and jingling kind of money any more. Compared to the please don't fold spindle or mutilate kind. Even if I could find it to fold and spindle and mutilate. So I am convinced that we will adopt some sort of ethereal currency. I'm just not as sure as you that it will be fractional ownership of enterprise. More like puts and takes against a ledger of things meaningful to the individual and negotiated at the time, in a kind of electronic version of my extra pair of shoes for your spare leg of lamb kind of way. After all, why not dispense with non-representative intermediate currencies altogether? The technology exists to render anything into ones and zeroes. All sizzle, no steak. Why not go all the way? If we're going to dream, might as well be in technicolor! John