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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (1424)	3/5/1999 5:10:00 PM
From: porcupine --''''>	Read Replies (2) \| Respond to of 1722

Wayne, your comments sound totally professional to porc, which he greatly appreciates --'''':> As for repetition, porx viewpoint is: 1. There are always newcomers; and 2. repetition forces porc to rethink, from which he benefits greatly. Sorry if it's a bummer for you --'''':< As for Tobin's thesis (was he the idiot that argued during the 1970's that 10% annual inflation was a good thing for job creation?), porc has been pondering that one since you brought it up awhile ago. Briefly, if he's talking about the replacement cost of tangible assets, it's impossible, because they keep falling. If he means actual ongoing capital outlays, porc is dubious. What's missing here, as has often been discussed, is better tools for measuring what the economic assets actually are, and hence their replacement cost. Briefly, IBM paid several times asset values for Lotus precisely because they didn't reflect the true cost of creating a competitive maker of PC software. IBM had already spent similar sums trying to do it internally. But, as you know, there's much more involved than the office equipment and real estate involved. And even if the present value of future salaries were capitalized on the balance sheet (a major source of the "missing matter" in calculating assets, imo), it still wouldn't account for the full economic value of what is being priced. For just one recent example, Computer Associates backed off from its hostile bid for Computer Sciences -- because if the incumbent personnel-assets walk out the door, hiring new players won't produce the same value, though their salaries might be the same. Buffett has given the example of the famous physician practice. If the famous physician walks, so does the intrinsic value. And, as Buffett put it on another occasion, he couldn't build a better beverage company than Coke if he spent a billion dollars trying. So, how does replacement cost of assets account for this --???> Anyway, bon voyage, Wayne. See you in 2 weeks. porc --'''':>