[ale] OT: corporate finance 101

[Chris Farris]

Its not a scam. A publicly traded company's stock is worth whatever the
next guy is willing to pay for it. What is often why you see stock price
fluxuations. One day a buyer is willing to pay X, the next Y (or in some
cases 2x).

The only scam comes in when say a CEO, lets call him Mr. LeDay, lies
about how well a company is doing and their accounting firm (for our
fictional example Andersen Arthur) is so incompetent they can't see
through the lie (or perhaps doesn't want to). 

The reason I think most people are so bitter, is that there were a bunch
of idiots out their buying stock with no knowledge of what they were
doing (Guilty!). "Hey CSCO is going up, I'll buy more of that". That
inflated the values of these stocks way beyond what a rational person
would pay for them. Much like Social Security the pyramid could not last
forever and it didn't. It was no better in the VC community when
professionals put their money into these VC funds and demanded that
those funds invest in the next Apple or Microsoft. What they don't
realize is an Apple or MS doesn't come along everyday. So the VC fund
managers bowed to their fund-holders pressure and invested in stupid
shit like diapers.com. The further compounded the problem by giving the
money to executive management who were still in diapers, with business
plans that came out of used diapers (enough of the diaper metaphors). 

Hence the reason so many are unemployed.

Chris

--
Chris Farris
Sr. Consultant
PrimeHarbor Technologies 
http://www.primeharbor.com
chrisf at primeharbor.com

> -----Original Message-----
> From: James P. Kinney III [mailto:jkinney at localnetsolutions.com] 
> Sent: 21 January, 2002 9:17 PM
> To: Chris Fowler
> Cc: cfowler at linuxiceberg.com; Atlanta Linux User Group (E-mail)
> Subject: RE: [ale] OT: corporate finance 101
> 
> 
> So from what I read of Chris Fowler and Chris Farris, it is 
> as I expected, SCAM!
> 
> Or just a religion. Sounds good, feels good, promises good 
> things will 
> come, but not based on a solid bed of irrefutable evidence. 
> 
> I know the stock values of privately held companies get set 
> by an auditor 
> who digs through the books and bases the stock value on the financial 
> status of the company at a point in time. Next year, it happens again.
> 
> But it does seem like publicly traded companies are very 
> nebulous in terms 
> of stock valuation. Too much psycology and not enough math.
> 
> Ick! Maybe Scott Adams is not doing the world a favor by 
> publishing more ways companies can screw their customer, 
> employees and interns.
> 
> But then, executive types don't read Dilbert, do they?
> 



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