Forum Archive Index - September 2000

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

> 
>If you analyse the value of your shares according to accounting
>principles then they have a value every moment that the market is
>open and there buy orders active.  This is the immediate
>(existentialist perhaps?) value of the shares.
>
>
Yes
>
> 
>However value is a concept which transcends the immediate 'price' of
>the share.  Whenever you buy a share you are effectively saying that
>the value of the share is not the current price.  This value exists
>as a 'belief' in the mind of the person holding the share.  The only
>time the two intersect is when a share is bought or sold.
>
>
I am being semantic here, but I would argue that the value is the 
price.  What is cash, if it is not a reflection of value?

When people are buying 'value' shares though, they are really buying 
'future value'.   Actually that's not quite right either as the 
instantaneous share price today often *is* a reflection of future 
value in discounted cash flow terms.  Investors buy because 
their perception of future value is different from that of the 
market. 
>
> 
>For those unwilling to believe that there is a future value to which
>the price is leading - you have made a loss.  But to those who have
>the faith to believe - the value is as yet undetermined.
> 
>Sacramental economics.
>
>
I can't agree with the religious analogy.   I am not saying that 
share prices cannot be influenced by sentiment.   But underlying that 
the value of a company is largely determined by future prospects.  
These prospects are tangible and can be measured in dollars and 
cents.  No 'faith' is required.
>
> 
>Either way you lose until you find someone who believes the value
>is higher than you do.
> 
>
If you are a trader that may be so.

But if you are an investor you are raking in the dividends while 
you wait.   I would hardly call holding something like RBD and 
getting paid 12% just to sit on your own money a 'losing' position. 



SNOOPY


---------------------------------
Message sent by Snoopy 
e-mail  tennyson@caverock.net.nz
on Pegasus Mail version 2.55
----------------------------------
"Q: If you call a dog tail a leg, how many legs does a dog have?"
"A: Four.  Calling a tail a leg doesn't make it a leg."


----------------------------------------------------------------------------
http://www.sharechat.co.nz/          New Zealand's home for market investors
http://www.netbroker.co.nz/        Trade on Credit, Low Brokerage. Join now.
----------------------------------------------------------------------------
To remove yourself from this list, please use the form at
http://www.sharechat.co.nz/forum.shtml.