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Technology Stocks : IBM -- Ignore unavailable to you. Want to Upgrade?

To: Mark Brophy who wrote (2977)	4/27/1998 11:53:00 AM
From: Jules B. Garfunkel	Read Replies (2) \| Respond to of 8218

Mark, Welcome over here to the IBM thread. It looks like I can use some help defending my IBM Put position, (ggg). Unfortunately, the new comers over here have not gone back to read my early analysis of IBM. I originally started buying IBM Puts as a hedge against my INTC profits. This goes back to January 1997, when IBM was at 170 pre split. In looking back over the 15 months since then, I think almost everything that I predicted is playing out as expected, except IBM's stock price. What I didn't realize at the time, is that IBM had to continue buying back their stock, at almost any price, if their earnings were to look respectable. Regards, Jules PS...It took almost a year and a half before my Intel investment started really paying off, but remember INTC has split twice since then. So no, if history repeats, I don't think we will not have to wait 9 years for our short position in IBM to pay off. But as always, I reserve the right to change my mind at any time, or to be completely wrong.

To: Mark Brophy who wrote (2977)	5/2/1998 7:17:00 PM
From: Bill Martin	Read Replies (1) \| Respond to of 8218

Re: I'm amazed that they've been able to report earnings every quarter without increasing shareholder's equity. This isn't really all that amazing -- it's simple mathematics. Do a little calculus on the problem and you'll see that if a company buys back stock its stockholders equity goes down and its ROE (Return on Equity -- one measure of quality of management) goes up. IBM's ROE is currently above 30 which isn't shabby in any league -- MSFT is currently about 33 I believe. Bill