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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: marginmike who wrote (27385)	4/18/1999 3:13:00 PM
From: Maurice Winn	Respond to of 152472

Stock Splits Good companies can split their stock and the stock will continue to rise because fundamentals are good. Weak companies can't so their stocks don't. That, as already pointed out, explains the 'academic research' which 'proved' that splits increase the price. Sure, there is a herd effect which also boosts the price of splitting stocks temporarily, but that is just a blip. The herd likes the 'cheaper' stock. This idea is firmly entrenched in huge numbers of people. Maybe the academic research only measured this - I doubt it. Where there are 'tradeable parcels' of minimum 100 shares, there is some good reason for preferring 'cheaper' stocks; people haven't got enough money to buy a parcel. To sell something, attention is needed. Maybe splitting stock is a useful way of increasing attention. Personally, I find it annoying as I need to mentally adjust for splits, new stock etc constantly. Measuring sticks which constantly change length are a pain to deal with. A bit like the money supply - which is infinitely elastic and constantly being increased at about 10% with The New Paradigm hacking prices quicker than the Fed is printing. But if a prospective shareholder has some money, the important thing is to separate them from it. If they have some belief and that belief can be accommodated, then we can do that. Most people are unable to understand the intricacies of balance sheets, revenue, price to earnings ratios and all that esoteric stock market stuff. They certainly can't understand concatenated Fourier analysis of Walsh functions in convolutional turbo coding [that's what CDMA is]. They have no idea at all whether it is better than TDMA. What they can understand is that a stock price is going up! That means that everyone thinks it's good. It probably is good and they are right in that judgement. If the stock splits, that's another sign that things are going well. So they crowd in. They go on crowding in because the crowd is crowding in. That pushes the price way up. After a while, the people who do understand wave functions and the need for earnings per share on a 10 year basis start to head for the exits because they know it is fully valued. Still the crowds arrive, not wanting to be last one in. All the sensible holders might have already sold, so there is only the mob left holding stock. Sure, the people who can really figure it out might borrow some stock to sell, hoping to see the price drop, but the mob is an unruly thing and might just trample right on over the short sellers, separating them from their positions. At some stage, cognitive dissonance sets in. Perception and reality have clearly parted company and the mob heads for the exits, which are very crowded. Not everyone can get out and thousands are trampled to death. Being in the mob and planning to be first out is fun, but a bit like bullfighting - one can get gored in the nether regions. I'm quite happy for the mob to buy Qualcomm. When they offer me more for my shares than I think they are worth, I'll sell them to them. I might even be tempted to hold on for a higher price and try to be first one out when the music stops. The best way for the prospective shareholder to be separated from their money is for Q! to offer new shares for sale, to raise money for the next great venture into The New Paradigm. Warren Buffet is diverting a lot of money into Coca Cola and Gillette, which is fine in a way, but the real value to the world will come from investment in the serious New Paradigm stuff, like MEMs, fuel cells for cellphones, CDMA, Eudoracoin [TM], biotechs. Q! needs to compete with Warren for the investor's dollar. Commotion and a rising price are a good way of doing that. Mqurice Dow 16,000 Feb 2002 200/2/2000 @843