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

To: chaz who wrote (61230)	9/9/2002 8:31:07 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 77397

chaz [what do you mean by] "real enterprise", "primary market", "secondary market"? Primary market is where the company issues shares in exchange for capital. Through 'real enterprise', the company then sets about generating a return on invested capital. Which benefits the shareholders proportionately. This is the economic activity that underpins the capital gains of a shareholding. Secondary market is where shareholders exchange shares with each other in exchange for each other's money. This generates absolutely no wealth for shareholders, any more than swapping underwear with your neighbor qualifies as a "change of clothes". No amount of activity in the secondary market generates economic value to the participants. In fact, because of frictional charges net economic value in the secondary market is negative. The folks who end up with more capital than they started with are those who get what others lost. Them, and the brokers who take a fractional commission on every trade. The market is zero sum only when equities are "fairly" priced relative to the value in the primary market. When equities are overpriced relative to the primary market, the sum shifts from slightly less than zero to substantially less than zero. Turning an uphill battle for wealth into a climb up a cliff. John