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 : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Mary Cluney who wrote (38424)	10/30/1997 2:06:00 PM
From: Mohan Marette	Respond to of 186894

CHIP,RECOVERY IN 97, GROWTH in 98.I like this picture. yahoo.com

To: Mary Cluney who wrote (38424)	10/30/1997 2:40:00 PM
From: Reginald Middleton	Respond to of 186894

<I feel somewhat insecure when communicating with financial guru's.> I am not a Guru, I simply know how to learn from other's mistakes. <Why are you revealing your secrets before you have had a chance to get rich yourself? Would your theories still work if everyone knew about it? > I am not revealing any secrets. The theories I espouse have been around since the late '50s - early '60's, ever since CAPM (Capital Assets Pricing model) was popularized. The reason why everyone does not know about it is because there is one thing that can always be guaranteed in the markets, and that is the perpetual ignorance of the "average" investor. Not to be condescending, but many investors (amateurs and so-called professionals alike) continuously subscribe to methods and practices that have perenially proven to be near useless, yet they fail to subscribe to alternative methods. Market timing, earnings capitalization, etc. have steered many the wrong way while considerably more empirical methods are abound (these are the same empirical methods that the banks use to underwrite the securities in the first place). <After all, you can't tell me that everyone can get rich. Or can you?> No, everyone can not get rich. Then again, everyone can (as is proven historically) not seem to follow the most empirical path either.

To: Mary Cluney who wrote (38424)	10/30/1997 3:52:00 PM
From: Craig M. Newmark	Read Replies (2) \| Respond to of 186894

Ms. Cluney, If I may butt in here, you needn't apologize for your "naivete" because you are precisely correct. Mr. Middleton's techniques are probably very useful tools for corporate managers, in much the same way that study of marketing and accounting are. But they will not let an investor do systematically better than the market. As you say, if they did, people would use them and the stocks identified as "undervalued" would be bid up until there was no further superior performance to be expected. Mr. Middleton replies that the "average" investor does not know about his techniques and may use silly techniques to pick stocks. Very true but quite irrelevant. The stock price is not determined by what the "average" investor knows or doesn't know. As long as there are some very well-informed investors--and believe me there are--prices will be driven to levels that reflect what they know and believe. The only method to consistently superior investment performance, assuming you don't possess inside information, is to have a different and more accurate forecast than the market's of the future. Mr. Middleton's numbers reflect what has happened in the past; unless he can forecast more accurately his method will yield no special insight or special result as far as investing goes. Good luck. Craig M. Newmark Associate Professor of Economics North Carolina State University