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To: Don Lloyd who wrote (29178)	2/25/2003 2:29:19 AM
From: Raymond Duray	Read Replies (1) \| Respond to of 74559

Don, Re: If you are the person with one million chocolate bars and little or no cash, it stands to reason that you will be willing to give up a single chocolate bar for cash as you will likely be long dead before you can eat all of your million bars, even if you didn't get sick of eating them in the meantime. Perhaps this is the crux where you will agree with me that occasionally, nations become mad. As in insane. This is one of those moment. The U.S. is insane. Your comments certainly seem to indicate this. Wise observers describe this malaise: timesonline.co.uk Clearly, you don't have the capacity to dispute this. But you should at least be informed that you are mad.

To: Don Lloyd who wrote (29178)	2/25/2003 10:57:58 PM
From: Moominoid	Read Replies (1) \| Respond to of 74559

That is, to a sole owner. And personally I can't figure out a reason why a company would be worth more or less to a sole owner than it would be to a group of N owners. Except that the shareholder meetings might be a lot easier to hold. So to me, for my purposes, the company deserves no different price than what a sole owner would reasonably pay if he had to pick up the tab for running the business himself. The whole tab. A few reasons but I don't think much to do with utility theory... Tax benefits Control being the main ones I can think of.. Utility theory as you are suggesting would mean the company would be worth less to a single owner primarily due to increased risk relative to holding a portfolio of smaller chunks of different firms. But we observe the opposite in that takeovers happen at a premium. Various reasons to go public - raising cash for investment - even so that they can grant options to executives in some cases (why they just can't give them a bonus I don't know...). When the original owners want to quit because they want to move on and when the owners think stock market valuations are too high.... among them..... Selling some of your stock does reduce your risk as long as you retain the control/taxation benefits and so the utility theory will come in there. But it seems unless owners want out and move on generally owning the whole company is believed to outweigh the risks of doing so... Just my 2 cents of musings. moom

To: Don Lloyd who wrote (29178)	3/1/2003 11:39:13 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 74559

I can't see how you can worry about whatever cost the free ski passes have, as it only applies to the ski resort owner, not the company. Well, that pretty well explains everything. But I'll give you a hint in case it's having a hard time crossing your mind: I'm thinking from the perspective of an owner. Stuff that costs owners costs owners. Even if they are "free" to the company. Like ski passes. Or stock options, for that matter. Ref my statement: "I can't figure out a reason why a company would be worth more or less to a sole owner than it would be to a group of N owners. Except that the shareholder meetings might be a lot easier to hold." Where you responded: "This is because you don't know or accept the subjective theory of value and the law of diminishing marginal utility."... plus a nice lecture. Sorry but wrong again. It's actually because I am setting aside the value of determination for the sake of simplicity. There is a whole argument to be had around this topic, as moominoid pointed out. But has nothing whatsoever to do with marginal utility. "Owners" of a company are entitled to two things: (a) rights of determination, and (b) claim on any distribution of liquidity. When we allow democracy its place in the sun and suggest that rights of determination are unchanged in the hands of many versus few (arguable, of course), what is left is a claim on distribution of any liquidity. Which is unchanged regardless of the number of slices the potential liquidity is divided up into. Sure, if I have a million slices of potential liquidity, one of those slices would be much easier to give up than if I only had two. But how about we take it a step further and ask ourselves what is utility being marginalized here. Turns out it's dollars: when liquidity is measured in dollars, then a slice of liquidity is a slice of dollars. Which is dollars. So when I'm trying to compute the number of dollars something is worth, it's nice of you to jump in and lecture us all on how the dollars it is worth will buy more or less chocolate bars if they're in the hands of more or less people. Sure. You're right. But about on point as a lecture on photosynthesis during a discussion of whether or not it's going to rain tomorrow. The costs of employee and other services all in the end impact shareholders, no matter by what complex path they do so. But the costs cannot be counted twice. Here we agree again, and is the root of my own assertion. However, in the last sentence you are alluding to the fallacy that that counting stock options as a cost on the earnings statement would represent counting them twice. Try this on for size Don. Take two identical companies with the same N owners. One which pays its employees an entirely cash wage and finances the wage cost by selling shares to its N owners, versus one which pays its employees partially in cash and partially in shares, where the employees turn around and sell those shares to those same N owners for the same cost. If all things are equal (same N shareholders, shareholders end up with the same number of shares, employees with the same amount of cash, company with the same goodies in the end), the value of the two companies are the same, and therefore should be worth the same. But one would report a higher EPS than the other. One of them counted the cost of stock compensation, but the other one didn't. Which one is it? There is no double counting going on Don, there's merely counting once, properly here, and once properly there. Like I said, if I count my nipples first on my fingers and then on my toes, it doesn't double the number of nipples I have. However, if you only look at the tally on my fingers and I only count on my toes, you might get an incorrect impression of my anatomy. If you weren't careful. John