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 : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (10196)	6/6/2004 3:19:24 PM
From: Big Bucks	Read Replies (2) \| Respond to of 25522

Brian, "But simply splitting the stock does not in any way dilute. If you and I each have 1000 shares and the stock is split, we each have 2000 shares, and the exact same percentage ownership of the company as we had before. So I ask again, how is this in any way dilutive?" Good and fair question..... In order for a stock to increase in value there must be buying demand.....someone must be willing to pay more for the stock after you have purchased it. This requires either the same buyers to increase their stock position or for new buyers to enter the market. In either case there must be some justification of a potential profit motive which is the incentive for buying the stock. Would I buy microsoft as a long term buy and hold, not likely....why? Because, even though it has great margins, products, market dominance, etc., it is in a mature and relatively saturated market....growth rate is slowing. It takes a lot of profit to move the price up due to the amount of shares available. The stock becomes sluggish like a beached whale, it flounders around but doesn't move much. Because of it's size (outstanding stock) it loses its' mobility.... I don't want to try to move a beached whale, eventually they die under their own weight and begin to stink driving everyone away... BB

To: Proud_Infidel who wrote (10196)	6/6/2004 3:41:24 PM
From: Big Bucks	Read Replies (1) \| Respond to of 25522

Brian, BRKa is for high end investors and institutions. It is well diversified in consumer core industries, many of whom pay significant dividends and offer a semblance of security due to their consumer market size. As long as consumers will continue repetitive buying patterns these core companies represent a continuous revenue stream, which is what Berkshire wants. These sort of companies are not as cyclically volatile and represent pretty good security, regardless of economic conditions.... As long as they have a positive growth and secure revenue stream they will remain in the Berkshire portfolio. They are cash cows.. If they lose their revenue stream they are no longer an asset to be held.... How many of the core companies that BRKa holds have split in the last 10 years..... I don't know, but would be willing to bet not many.....Why not? Could it be that the demand for new shares isn't justified? AMAT was once a huge growth stock, IMO, it is a victim of its' own success. It has made chip making technology a commodity business and its' customer's need to have extremely deep pockets and high profitability to stay competitive ....Another industry shake out will happen eventually, that will be determined by the market place.