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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: dougjn who wrote (16108)	10/7/1998 12:38:00 PM
From: Joe NYC	Read Replies (1) \| Respond to of 152472

Doug, When share prices go down, overall, wealth goes down Share prices are not wealth. They are just that: prices. Shares themselves are wealth, because they certify you to be the owner of the company. Money is primarily a medium of exchange, secondary a temporary storage (between transactions). It is simpler to think of a subway ride being $1.50, QCOM share being $45, a cell phone being $160, one hour of your labor being worth say $40, rather than calculating that a cell phone is 4 hours of your labor, Qcom share is worth 30 subway rides. But when Qcom goes to $60 in next hour, no new wealth will be created. Only the ratios change. You will be able to trade it for 40 subway rides, you will have to work 1.5 hour to get one share. Another way of looking at it is that non-financial assets just became less expensive. When financial assets go down in price, prices of non-financial assets go up in relation to them. This may not be reflect in dollar terms, since subway ride is still $1.50, but ratios shifted. Saying that stock prices going up is good is one sided view. It is from the point of view of potential stock seller. It is bad for a subway train conductor who is about to buy shares in his retirement account. Joe

To: dougjn who wrote (16108)	10/7/1998 12:44:00 PM
From: engineer	Respond to of 152472

But, suppose that you did not sell shares and one of you had the two shares and the other cash. when the shares went to $40, then your wealth relative to the other person with cash would have changed alot. He will still have $100, you will have $80. this means that he will be able to buy more capital goods and services than you would be if you sold your stock. It is not the total money supply level of wealth that matters, it is your relative positon of wealth among the money supply which matters. If your mortgage, power bill, telephone bill, credit card balances all were to be adjusted to the decrease in the stock price, then you would not have much concern with the drop in the stock price. Your shares tomorrow would buy just as much as today. Same goes in a rising market. Why does everyone feel so good? Because the relative price of the shares relative to the amount of real captial goods and services which they can afford went way up. Or to look at it like you have been, part of the money supply flowed your way for awhile.

To: dougjn who wrote (16108)	10/7/1998 3:32:00 PM
From: Maurice Winn	Read Replies (3) \| Respond to of 152472

Doug, wealth isn't destroyed by the share price drop. My share of it sure is though! Wealth is destroyed when people make things or do things which don't have value. Even only moderately valuable things like the tallest building in the world in Malaysia isn't strictly wealth destruction as it does have value, though not enough to justify the investment. Hence it has a huge opportunity cost, to coin a phrase, since the concrete, steel and effort could have been used to much better effect in building some decent apartments in New York. The people who made the mistakes sure feel as though there was some wealth destruction though! But really, their share of it just flowed away to the people they dealt with. Like LTCM lost their share of wealth, but some of it flowed over here - it didn't simply evaporate. What a mess in the markets today. While Qualcomm is producing wealth flat out, the share price is going down. Not to worry, the wealth will flow to the shareholders no matter what the share price is. Even if the share price goes to $1, the shareholders will make exactly the same money from profits, because they continue to own all the returns to Qualcomm. People have confused rising share prices with investment. Investment is the profit, or free cash flow, to coin a phrase, which a company generates. NOT the share price. Of course the share price is usually reasonably correlated with profit and free cash flow, but there are exceptions - note Yahoo! Mqurice PS: Good suggestion Tom, I'll go with $80 30 November to allow the results to kick in. There's always 1999 at a pinch!