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Strategies & Market Trends : Bill Wexler's Profits of DOOM -- Ignore unavailable to you. Want to Upgrade?

To: Y2k_fan who wrote (3256)	10/1/1998 9:39:00 PM
From: Bill Wexler	Read Replies (1) \| Respond to of 4634

<<Why own stocks?>> Wrong. The question should be why own stocks in frauds like ZITL and CCSI. Equities provide superior returns over the long term The arguments about how the stock market has had decade of twenty year long stretches of underperformance does not really mean much if you don't make the mistakes of overdiversification and stick to a disciplined approach of buying high-quality enterprises with reliable earnings streams. <<I think that you are making a costly mistake>> TokyoMex, momentum gamblers and ZITL loonies make costly mistakes. <<I bet that you have never been to Asia before.>> You lose. I've been to Asia many times. Remember what I said about buying high-quality companies with relaible earnings streams? Check out Sony's (NYSE: SNE) long-term performance relative to the most gruesome equities bear market in recent history. Even the better cyclicals such as Honda have done relatively well.

To: Y2k_fan who wrote (3256)	10/2/1998 4:42:00 PM
From: BelowTheCrowd	Read Replies (2) \| Respond to of 4634

Y2K fan, > Most high tech stocks do not have dividend And why should they? From a tax perspective, dividends are the WORST way to pass on earnings to shareholders. If you pay a dividend, then first you (the company) must pay income tax, THEN the shareholder who receives the dividend must pay income tax on the dividend. Thats DOUBLE taxation on any dividend dollar paid out. Younger (some high tech, some others) firms who didn't get into the dividend trap years ago have figured out that it's a lot more efficient to spend the same money buying back company stock and increasing the stock price in that way. The shareholders can then sell the stock at THEIR CONVENIENCE. Long term shareholders can sell and claim the profits as long-term capital gains at a more desirable rate than dividend income. It works better for all concerned. Of course, you would rightly point out that in a bad economy share repurchases might have to be halted. But dividends are not a sure thing either. In bad times, many companies have had to cut or suspend them too. Bottom line is earnings. If the earnings are strong it'll translate (by one mechanism or another) into value for shareholders. Exactly how the company chooses to create that translation can vary. Intel, for example, takes the position that they will pay the minimum dividend required in order for them to be considered a growth and income stock, rather than a pure growth stock. I think it's about 1/2%. Their belief is that by being included in less volatile growth and income portfolios, they take some volatility out of the stock. Microsoft doesn't bother. They're happy to be growth only, and pass on the value with ongoing share repurchases. Same with Cisco and others. mg