Forum Archive Index - May 2002

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

Hi winner69,
 
>
>Can't entirely agree with you Snoopy.
> 
>Doesn't that chart basically track what 1 AIR share has been worth
>in the market over time? Maybe doesn't always reflect what happened
>during rights issues etc but a pretty good guide as to what that 1
>share was worth at any particular time.
>
>

Correct Winner69.   However, you may wish to consider what one share 
represents.  It represents a fraction of a business.   When you buy a 
share of a company you are buying into a real business.


>
> 
> That 1 share price you mentioned that closed at $1.58 at the end of
> year 2000 is worth 56 cents today isn't it?
> 
> You seem to confuse the issue when you say it was really only worth
> 28 cents ($1.58 x 0.18) back then - the holder would have been able
> to sell it for $1,58. Yes?
>
>



You misunderstand how I see the use of that chart.  You cannot sell a 
share at the end of year 2000 today.  That time is past.  So what the 
holder 'would have been able to do' is not relevant.  I'm not saying 
the share was really only worth 28c back then at all.

I am saying that *now* you have a share which is part of 18% of that 
business that existed before.  The other 82% of that businessis now 
owned by the government.   So given that you now have a share of 18% 
of the pie instead of 100% like before, it is silly to compare the 
fraction of the slice of pie you have now, with the fraction of pie 
you had then *directly*.   Your days of access to the big pie are 
over.   82% of the pie has been taken by the government and locked in 
the pantry. And there is nothing you can do about it :-( !
   

The main thing that matters with a chart, as I see it,  is to be able 
to compare 'now' with what happened before.  You are only fooling 
yourself if you think you can ignore the size of the pie.  You think 
that  because you still have the same gross number of shares before 
as you had afterwards then you still have the same amount of pastry 
on your plate?  If you don't adjust the price as I described you are 
not comparing apple(pie)s with apple(pie)s I see it.


>
> 
> You seem to suggest that that 1 share is worth double what it was
> back at the end of 2000. My maths say it worth only about 2/3rds of
> what is back then.
> 
> 

???

I picked the end of year 2000 as an easy point to read on the chart.  
But I could have picked any point in time before the 
recapitalisation was factored into the market price as an example.  
That end of year 2000 date is not significant in itself.

SNOOPY



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