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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Mick Mørmøny who wrote (102883)	2/19/1999 12:11:00 PM
From: Knighty Tin	Read Replies (1) \| Respond to of 176387

Madafas, Thanks for the nice note. My investment methods and techniques are better discussed on The Ask Michael Burke thread and on The Internet Financial Connection. As far as the stock buybacks: Sivy wrote a good article. Buying back stocks at bottoms makes great sense. Buying back ridiculously priced stocks during a bubble is insane, longer term, though it can be profitable shorter term. It is like an athlete taking steroids. True, he is much more likely to die young, but the junk does increase performance in the near term. The problem is, buying stock is a waste of a company's safety margin. A leveraged firm like Dell builds little in cash or book value to tide them over during the inevitable downturn. Shareholders don't care, as the steroids do nominally inflate eps and the stock price during bull markets. However, it is death on a stick during a business down cycle. Folks at Dell are not fiscal morons, so why do they take this gamble with shareholder assets? There are two reasons. Mgt. is being overpaid to perform and they have painted themselves into a corner of irrational expectations with their shareholders. Do they invest for the long haul and cut compensation today? Not under the new pair of dimes, where there will never be another 1991 for Dell. <g> And, as Sivy says, some of these firms are even more reckless, actually taking the co. into debt to buy their steroids. Dell is an offender here, though hardly the worst one. IBM is a monster in these slimy types of transactions, and they aren't even growing. The sad thing is, shareholders think that companies that play such crap games with their money are "managing assets" well. And they are in a bull market for their stock. It is like horse racing. Every time I hit a big trifecta, I wish I had bet more money on it. But when my horses refuse to come out of the gate, I hate the money I wasted on the buy. Lately, Dell and a handful of other nifty techies have been on a run. When that run ends, it will be discovered, to the shock of most shareholders, that no value was built at the co. during all those great up years. Best, MB