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

To: Rob Bowerman who wrote (4135)	10/26/1998 12:08:00 PM
From: Rob Bowerman	Read Replies (1) \| Respond to of 8218

SB, Thought some more about this and I have another comment. Since reducing number of shares outstanding magnifies both highs AND lows, then for "long and hold"ers, stock buyback programs are a dream come true. For illustration purposes, if a static PE multiple of, say, 20 generates a stock price range from $120/share to $140/share based on some period of time's EPS numbers with a billion shares outstanding, then your profit potential is $20/share. The same scenario with only 800 million shares outstanding would give a range of $96/share to $175/share, a profit potential of $79/share. Knowing IBM's extremely long stock history, I'd rather invest my long-term money in the second scenario as opposed to the first one. In fact, the second scenario would also be better for the shorters as well, since all stocks will go up and down periodically. Only if an investor invested his/her short-term money AND they had to get out during a dip, would the second scenario not be advantageous to them. Thoughts? --Rob

To: Rob Bowerman who wrote (4135)	10/26/1998 10:33:00 PM
From: Skeeter Bug	Read Replies (1) \| Respond to of 8218

rob, your side has been expressed and i understand it. my side has also been expressed. i think it is obvious that the 5% return isn't imaginary. i lend joey $10 of my money for a year at 10% and in a year i have $11. if i borrow at 5% and lend $10 to joey for a year I net $0.50. under the first scenario i can buy a $1 loaf of bread. under the second i can't. nothing imaginary about it. the stock goes up and it is pure genius. the stock goes down and it is pure dunce.