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Technology Stocks : Oracle Corporation (ORCL) -- Ignore unavailable to you. Want to Upgrade?

To: Shane M who wrote (9401)	1/24/1999 2:25:00 PM
From: MeDroogies	Respond to of 19080

Past where fair value would place it? I guess it depends on how you define fair value. I still can't believe it's at a discount (PE-wise) to its industry group.

To: Shane M who wrote (9401)	1/24/1999 3:13:00 PM
From: Adam Nash	Respond to of 19080

I agree that ORCL has run a little past where fair value would place it, but after looking at what the capital gains hit would be if I sold, I decided to hold. My basis is @24, and if I sold for 50 then the govt would get about $8 of my $26 gain (at least until I qualify for long term treatment). This means ORCL would have to fall below $42 for me to reestablish my position and come out ahead on the deal. I don't think I can make money on that bet, so I'm holding. I bet alot of others feel the same way. This is not actually the correct way to analyze the transaction. You're $50 stock is carrying an $8 liability. When you re-establish your position, you will not be carrying the liability. From an accounting point of view, if you sold at $50 and rebough at $49, you're total net worth would be the same. The problem is that people rarely do true accounting on their assets and liabilities. Your unrealized gains are a tax liability that should be accounted for when valuing your net worth. Then again, it would be negative for your cash flow, as you removed a liability by expending cash. Just pointing out that there are different ways of viewing the same transaction. I just sold 1/2 my Oracle stake at 50, largely because I think it is over-run a bit and I wanted to cover my margin.