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Microcap & Penny Stocks : DCI Telecommunications - DCTC Today -- Ignore unavailable to you. Want to Upgrade?

To: Mad Hatter who wrote (6628)	7/8/1998 1:39:00 PM
From: Mr. Cellophane Man	Read Replies (1) \| Respond to of 19331

MH, You write (in response to Lou): "You comments regarding volume are absolutely correct!!! Volume action is the most important factor in T/A". In my "devil's advocate" question I asked why everything isn't just a matter of scale (?). I think the underlying assumption is that volume implies consistency, which I feel to be more important. I also mentioned Fidelity Magellan and Warren Buffet as "institutions" that could have disproportionately large quantities a mid-to-large caps and hence have the capability to "trash" them. I think it's pretty well known that Buffet has the capability to (significantly) move the entire silver market -- both up and down. But after I made my statement about MFs moving medium to large sized companies, I did a quick example. Magellan is currently about a $75B (Billion (!)) fund. Say one of their holdings is mid-cap XYZ with 200M shares outstanding at a price of $25 giving it a cap of $5B. Say Magellan owns $500M (= 20M shares) worth of XYX. This means Magellan has less than 1% (about .67%) of its total value in XYZ. Finally, say XYZ has a typical volume of 1-2M shares/day. My contention was if Magellan decided to dump its 20M shares, it would trash XYZ's chart just as badly as one of our "big sellers" dumping 50-100K DCI shares on an otherwise typical day.. This is all hypothetical and Magellan probably has fund rules that prevents it from owning 10% of any one company, but if it could, it seems it has the same "trashing ability" that disgruntled CC holders have over us. One conclusion I get out of this (assuming I haven't screwed up my math), is that it's better to have lot and lots of shareholders, each with relatively small positions so no one person/institution has the trashing ability. So, I guess this is what I think leads to the controlled/consistent buying/selling I think TA needs. Given all this, perhaps the real problem with BBs is that they typically have a small number of shareholders, each with large positions. So, guess I'd still contend the volume is all relative. This is probably all one great big "duh" to everybody ... if so, thanks for indulging me :-). Dan