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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: accountclosed who wrote (36234)	11/14/1998 6:04:00 AM
From: Greg Jung	Read Replies (1) \| Respond to of 132070

Low price/book ratio in Steels: If the expected losses come in then book value can drop considerably. If you buy them, it is with the idea that the dumping situation will be a temporary situation and stability is in sight. Greg

To: accountclosed who wrote (36234)	11/14/1998 1:57:00 PM
From: Knighty Tin	Respond to of 132070

AR, I can explain the theory, but I don't necessarily agree with it as applied to the steel cos. Back in the late 19th century, most railroads went bankrupt, and they were selling for pennies on the dollar of their book value. However, if you look at the assets that make up their book value, a zillion miles of rail and 12 feet wide rights of way across America, you realize that this sort of thing is only of value to one type of co: a railroad. And the railroads were broke. Yes, it would cost you much more than what the stocks of these cos were selling for to duplicate their assets, but who in his right mind would do that when the market was in glut and disarray? Now, some would say the same about the book values of steel and even some chip cos. These assets produce losses, so they are not something people want to buy at any reasonable percentage of their book value. Yes, they would be horribly expensive to duplicate from scratch, but who wants to do so? That's the theory. IMHO, they are cheap. But the market disagrees. MB