Forum Archive Index - May 2002

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

Hi Phaedrus,
 
>
>Snoopy wrote:
><<<< How do you explain that to the people who bought
> shares in the placement at 45c.  The price went *up* 
>to 55c.  What sort of a downtrend is that? >>>>
>   
>We are supposed to be looking at this from the perspective of a new
>buyer. Over a period of two months or more, the price they would
>have to pay for AUO shares had fallen steadily, 20% in fact, from
>68 cents to 54 cents. That sort of downtrend!
> 
>





Yes, but are not the people who bought shares in the placement also 
new buyers?  All you have shown us is that those new buyers who 
bought the shares 'on market' would have bought them in a downtrend. 

For those who bought the shares at 45c in the second market, the 
trend was very much upwards.




> 
>Snoopy, I do not see how you can claim that this was not a "real"
>downtrend. The money saved by waiting as the share price fell was
>certainly real enough!
>
>





Very True.

But equally real was the money gained by those investors who 
bought the shares at 45c in the placement.  They could sell those 
shares at 55c or so on market.  



   
>
> 
> "Fact is, the price was falling, whatever the reason(s)"
> <<<< Only the price of the existing shares fell.  The price of
> shares issued in the placement rose >>>>
>  
>There is no separate market for the new shares - it is completely
>artificial to separate them out. 
>
>




There certainly was a separate market between the dates of 26th 
February and 23rd April.  Institutions bought shares at 45c.  Yet 
those transactions were never part of the market that you were 
plotting out as end of day closing points Phaedrus.   If there was no 
separate market, why is it that you were not able to buy AUO shares 
at 45c?



>
> 
> <<<< How can shares that were issued at 45c be in a 'falling wedge
> formation' when the price has gone to 55c? >>>> 
>  What was paid for any particular shares is totally irrelevant. Even
>  if you paid only 10 cents, the price had still fallen from 68 cents
>  to 54 cents, in a Falling Wedge formation.
>
>




Price paid on its own is totally irrelevant- true.

What I am arguing is that the price paid *at the same time* as the 
open market share was falling from 68c was not irrelevant.   Do you 
deny that at the very moment a member of the public was selling their 
shares at 68c, there was a backroom deal being thrashed out with an 
institution to sell them shares at just 45c? 




>
> 
> <<<< If you bought into AUO on 15th May, did you buy pre-existing
> shares or shares that had been created as a result of the placement?
> >>>> 
>
> Snoopy, again, this is totally irrelevant. I don't know. I
> don't care. It makes no difference because they are all the same. I
> don't know who I bought from either. Or what they had paid. 
>
>




Exactly Phaedrus, and thankyou.  *That is exactly the point I am 
trying to get you to admit* !

You are correct of course.  You have no idea who you bought the 
shares from, because it doesn't matter.  If you bought on 15th May 
then all the shares are the same.  You don't know whether you bought 
your shares from someone who had been holding them for two years, or 
someone who had only just bought the share which was 
originally created in the second market (which since April 23rd has 
been combined with the pre-existing shares market: there is only one 
market since April 23rd) as a result of the placement.

Consequently you have no way of knowing whether the shares you bought 
were part of a new short term uptrend (coming after a short term 
downtrend from 68c to 55c) or whether you are buying shares that 
started out at 45c and are continuing an existing uptrend.   As you 
said yourself: There is absolutely no difference between these 
shares!

Indeed perhaps you bought some of the old shares and some of the new 
shares to make up your parcel.  It makes no difference.   It is 
probably easier, and more accurate, to think of all the shares as 
'composite shares' as, from April 23rd.  There is no distinction in 
shareholder rights, or market price between the pre-existing shares 
and the shares created in the placement.   

*So here is the point I want you to ponder.*

If you agree that all AUO shares are now the same, THEN:

How can you look back on the AUO chart 'that has been' and 'know' 
that those shares you now own followed the price trace on your chart, 
*which only applied to the pre-existing shares*?

SNOOPY


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e-mail  tennyson@caverock.net.nz
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"You can tell me I'm wrong twice, 
but that still only makes me wrong once."

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