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Another couple of attempts at the 200 EMA
http://stockcharts.com/def/servlet/SC.web?c=$COMPQ,uu[h,a]daolyyay[de][pb60!c200][vc60][iUb14!La12,2...
Still failed...
Me think we'll contract before more attempts will be made.
My buys are still linked to breaking the 200 day moving average
KD
Optical Networking Market stabilizing?
Here's a month-old discussion of the topic:
http://www.opticallynetworked.com/news/article.php/1593641
KD
Back at ya' dpb
Colors would help a lot to this place (why must message boards be colored like inside public toilets?) but it would take more than just color change to make this place what Infoseeks boards were...
It was the layout, AND the colors... and the Reuters ticker on the frontpage with the business headline news and so on...
-It was sleek... It was... it had a kind of subtle elegance... Somewhere, a designer must have sat down and rationalized "how do we make this place look attractive?"... It was... all of it!...
I can't put words to it... but it's something different from this place and others...
Blue and white...
Colors and decorations of a public toilet...
-Like Yahoo, RB and so on...
KD
FWIW: Mildly bullish signal from the Nasdaq:
http://stockcharts.com/def/servlet/SC.web?c=$COMPQ,uu[h,a]daolyyay[dc][pb60!c200][vc60][iUb14!La12,2...
Positive divergence on the MACD (The resent chart lows of mid February and early this week, bounced off supports with a slight downwards trend. Yet, the MACD bounced off supports with an opwards trend. This divergence often signals a short-to-medium term reverse in market trends).
As ever, the ultimate resistanse remains the 200 day EMA. Are we on our way to a re-test, or is this a short lived relief before the next leg down?...
KD
Another WiFi Focus story - from Macleans
http://www.macleans.ca/xta-doc2/2003/03/17/Business/56826.shtml
KD
dpb
"To me Infoseek became MUCH more than Google is today!"
I think the operative word here is became (as in was).
Once upon a time, Infoseek was the best search engine around. I'm not so sure it would be as competitive in this millenium as in the previous one.
"With it's Message Boards alone I found it uniquely powerful."
I would agree that the design was more welcoming and friendly looking than any other message boards I have seen elsewhere (including this place)...
That does not change the fact that it was uniquely the message boards least frequented of any portal on the web.
In reality, 90 % of the traffic was located on only 10 boards or less.
Back in those bubble-days, of course, most of the heavy traffic on other boards were from barn-storm posters screaming BUY BUY BUY or SELL SELL SELL (or FUCKOFFYOUPERVERTNAZIFAGGOTSONOFABITCH or something to that order) and little else. Infoseeks boards weren't welcoming for this kind of posters and I, for one, did not miss them one lousy bit.
That said, a web portal still need visitors and visitor numbers became less and less competitive.
Add to it that the financial links on the money board were totally unreliable (read: garbage - worse than if they had not been there!) and charts were linear (read: useless).
I guess what I'd really like to have, is a message board system much like what we have here, but with Infoseeks warmer colors and nicer layout. The layout and subtle warm colors gave you a fuzzy warm feeling of being pampered and cared for - even when you knew (in the latter times) that that wasn't really true...
KD
CNN Focus story on WiFi
http://www.cnn.com/2003/TECH/ptech/03/12/wifi.growth/index.html
KD
MSFT sells stake in competitor CORL
http://biz.yahoo.com/rb/030311/tech_microsoft_corel_1.html
Somehow, I kind of read this as the "kiss of death" to the old onceuponatime powerhouse Wordperfect software producer...
KD
Wireless web access at McDonalds
The burger chain McDonalds offers free web access at restaurants in Japan and soon also in the US.
Apart from burgers, fries and softdrinks, hungry visitors at McDonalds restaurants in New York and Chicago will in the near future get a one hour free web access. Should anyone want a further hour, it'll cost another burger or $3.
The burger chain is at the moment testing the concept of wireless networks (hotspots) at 10 resaturants in Manhattan, New York, and expect during the year to expand the service to all McDonalds restaurants in New York and Chicago.
The burger chain has already installed the wireless system in all its restaurants in Japan.
Translated from Danish from the following source:
http://www.comon.dk/index.php?page=news:show,id=13474
KD
Ericsson to build Europes largest public WLAN
Inspired Broadcast Networks (IBN) has announced that the company will install a gigantic network of wireless hotspots under the code name "The Cloud" in England. The technical infrastructure is to be delivered by Ericsson in collaboration with Intel and British Telecom.
In the first phase, 5,000 hotspots will be installed, which will be expanded to a nationwide network with 30,000 spots. The contract is, so far, the largest WLAN project for Ericsson and the network will be Europe's largest.
IBN is owned by the largest supplier of game machines in England, LLG, and the company has already installed digital entertainment platforms in 3,000 cafe's and gas stations.
IBN get the majority of its revenue through download-games for mobile phones and the company informs that it intends to offer various download services through the new network.
At the same time, IBN will set up a collaboration between various mobile- and broadband companies who can distribute capacity to their customers.
Translated from Danish from the following source:
http://www.comon.dk/index.php?page=news:show,id=13448
KD
Re: Infoseek vs Ultraseek
OK, Dave. But I doubt that Infoseek would outmuscle Google of today.
In the scientific journal "Nature" a variety of search engines were tested (in 1999, I believe) to see how well they covered the field of science on the net (i.e. how well would a search engine be at picking up a series of pre-selected sites, based on content of words).
Iffoseek did fare fairly well, but was still beat by Northern Light (a relatively unkown search engine to many).
I doubt any of them would reach Google to the knees, today and I know of no scientist today (including myself) who would use anything but Google p.t.
On a sidenote: If Infoseek was so superior, why would Disney be so busy finding another partner to power searches at the GO portal? It does not make sense... (It would take a conspiracy that would turn any Hollywood producer green with envy).
Beyond that - I understand that you want the love of your life (lol) back. We all dream of that, somewhere... So on this one, I'll back off and leave you with your dream.
KD
DickMN Re Disney sale of Infoseek
Correct me if I'm wrong, but as I remember it, Disney sold Ultraseek to Inktomi, shortly after the takeover of Infoseek.
Ultraseek was the professional version of Infoseeks search engine - it's "heart" so to speak.
The reason I remember it, was for writing a post, shortly before in which I compared Disney's plans with Infoseek to buying the opera star Pavarotti, only to take him off the stage he is sharing with Placido Domingo and tell him his new job is to sell tickets at the entry.
As the sale of Ultraseek then happened, shortly after, I though of writing a new post saying something to the tune of "And now, they just had his singing voice destroyed by surgical intervention to make him sound like Mickey, to push the point of his new job at the ticket booth..."
... But I was too sad to press the "post it" botton...
How can Disney talk about selling Infoseek - there is no "Infoseek" left to sell.
-Unless what they're actually thinking about is putting the Infoseek logo up for sale on eBay?...
I'll bid a penny for it...
1...
KD
YAKC buys back own shares from TVCP for $2 per share in an off-the-market deal.
It can only mean that both companies have an interest in TVCP not selling on the open market, where the YAKC share price is currently $5.05
TVCP must have suspected that the real value of the share is below $2 and YAKC must have desided that it was better to pay $2 per share, than have the actual market value of the share determined in open market sale (they have even more shares at hand that they would like to float slowly and gently, I suspect).
Whoever is paying around $5 per share of this stock at the moment, is being suckered hard, IMO.
I have never shorted a stock in my life and this will not become my first. But anyone who has the stomack for shorting - short the h*ll out of this stock, right now!
You can short freely, while the price is above $2. You have something close to a company guarantee that the stock is worth less than that...
KD
Re: Ridi
I had not been lurking this board until I was notified by someone
LOL - Dave still trying to win his competition, is he...
Well, welcome aboard. Hope you brought a stack of fire wood to keep warm and toasty. Spring is still a while away - both in MN and on WS.
In the meantime, I hope Dave will show you the bar - it's around here, someplace...
KD
LOLLLL!!! What a splendid idea for a message board!!
Good thinking, Dave!
If you still can, Dave, perhaps you should change the name of the board to TUB.com and then ask Merrill Lynch if they're interested in bringing you new board to a Nasdaq IPO?
Just remind them that unless they give you a "STRONG BUY" rating, there's always Price Waterhouse Cooper... They'll get the message for sure...
ROTFL!!
KD
Rotten weather for Herley riding, eh Ridi?
You've been lurking around here, have you? Man, has it been years since I've seen your cyberface, old boy.
203 in 2003... or something...
(ROTFL...)
(...or was that "RATTLE"?...)
KD
Vote Nixon!!
(I you think that was silly, you should see me drunk...)
Overture buys Alta Vista from CMGI
http://news.moneycentral.msn.com/breaking/breakingnewsarticle.asp?feed=OBR&Date=20030218&ID=...
Gosh, who'd have thought those fallen angels were actually still alive (-well, they are barely, anyway...)
Overture shares dropped like a stone, afterhours, whilest CMGI crawled up above the $1 line for (I assume) the last time in its miserable life...
KD
MEEEE, Dave - LOL! (eom)
Gee - Meme...
<<I'm usually posting on politics at a sort of underground "Politically Incorrect" ABC...>>
Never heard of it. If it's anything like the program of the same name, that used to run on ABC, I wouldn't be interested anyway.
The few segments I ever saw of that program with Bill Maher (?) had the appearance of some Kafka-like process in which the host would invite one he disagrees with and 4 handpicked helpers to assist him in publicly skinning the guy.
Programs like that could be interesting if they were fair, but the host was apparently so scared of being beat, himself, that anything like debate on a level above pre-school mentality, was unthinkable...
But - if that's what it takes to bring you to the board, I'll immediately choose someone to pick on...
Here's a que:
I suggest we lock up Michael Jackson on his Neverland ranch and throw away the key.
Alternatively, we can cage him up in his "song-tree" and open his ZOO (including his own cage) to the public.
I suggest we start the discussion with the issue "Who of us gets to throw the banana and who gets to throw the glass with anti-psycotic drugs?"
KD
Sign of longer term stabilization of the Nasdaq?
The trade volume of the Nasdaq is now down to where it was in the 4th quarter of 99.
I have to wonder if this implies that daytraders and do-it-yourself investors are finally giving up the spirit and leaving the Nasdaq for dead?
That might, in fact, be exactly what we need to get things back to normality.
What it essentially means is that the money turnover on the Nasdaq is down pretty much to where it was when the bubble really started to inflate in Q4 of 98.
http://stockcharts.com/def/servlet/SC.web?c=$compq,uu[h,a]wallyyay[d19980101,20030301][pc40][vc12]<>
-Just babbling - I know...
KD
The end of a bear-market rally.
200-DMA held and we're now looking at 60-DMA resistance like before:
http://stockcharts.com/def/servlet/SC.web?c=$COMPQ,uu[h,a]daolyyay[de][pc200!b60][vc60][iUb14!La12,2...
SP500 fell through its 875 support:
http://stockcharts.com/def/servlet/SC.web?c=$spx,uu[h,a]daolyyay[dc][pc200!a875][vc60][iUb14!La12,26...
-And so did the Dow:
http://stockcharts.com/def/servlet/SC.web?c=$INDU,uu[h,a]daolyyay[dc][pc200!a8300][vc60][iUb14!La12,...
As for market cycle - we're running out fo steam, fast:
http://stockcharts.com/def/servlet/SC.web?c=$BPCOMPQ,uu[h,a]daclyyay[de][pb20!f][vc60]&pref=G
http://stockcharts.com/def/servlet/SC.web?c=$NASI,uu[h,a]daclyyay[de][pb20!f][vc60]&pref=G
Sorry to be the bearer of bad news...
KD
You're misunderestimating - LOLLLL!
Charts are indicators of the market mood of the resent past and can give hints to the present mood, but that is all. They are not miraculous oracles by any means!
KD
Still waiting for that 200 DMA breakthrough
An optimists antidote to... me...
Weekly 3 year chart of the SP500:
http://stockcharts.com/def/servlet/SC.web?c=$SPX,uu[h,a]wallyyay[df][pa940!c40]&pref=G
Notice a bottom-type reverse head and shoulder formation (not visible on a daily chart) formed in the period from July to now, with a resistance of 940, not far from the 200 DMA resistance
http://stockcharts.com/education/What/ChartAnalysis/headShouldersBottom.html
Another way of saying it:
You can demonstrate either way with charts (at least for now), so as always - it's a lot easier to "predict" when things have already happened...
Or as the Danish humorist R. Storm Petersen said it (around 1920) "It's hard to predict - especially about the future".
KD
Nice index advances, but...
-But chart tecnically, they look grim. MACD not yet conclusive, but another down day or two again could lead to a final support breakdown. If that happens, there's no telling if we're on track for a re-test of lows or just an isolated local retraction.
I suppose the SP500 will be the trendsetter and the key is - as before - the support at 875
For the Dow, the key support is 8300 and for the Nasdaq, 1320-1325
-Any one of them fall, -expect the others to join.
Volume-wise, the SP500 is respectable, but the Nasdaq volume is weak, to say the least - again, doesn't bode too well, but is also not conclusive...
On the positive side - all major indexes are close to their 200 DMA. A momentary feeling of indicition could explain a lot and volume could pick up dramatically if the indexes break through to the upside and consolidate, above...
The resistances to keep track of are at the moment:
SP500: 950
Dow: 8860
Nasdaq: 1465
Either way, day of recogning is approaching rapidly.
Keep your eyes open, out there!
KD
Appetizer for juicy tech-stuff, 2003-style!
http://zdnet.com.com/2100-1103-978930.html
Plenty of interesting appliances to invest in - or producers of them to invest in...
802.11 wireless tech - a very promising field.
Dammit, I would so love to invest in Linksys, but they're a privately held company... That's NOT FAIR!!
Anyone with good alternative suggestions, out there?
Location based services... QCOM's has patents on some of that stuff! Hmmmmm...
Oh, the posibilities!
(NO - I'M NOT BUYING FISHER PRICE!! - Even my son is too old to find their gadgets "Cool" - LOLLLLL!!)
KD
Happy New Year, folks! <eom>
Optimism fading, Harry! Market-warning, folks!
SP500 went from its dip in July, up and then formed a classical bearish "head-and-shoulder" formation with a support at 875.
It then broke through the support (as the bearish chart pattern would suggest), took another dip and then ran up again.
This time around, with the same support at 875, it has now formed an equally bearish "descending triangle".
http://stockcharts.com/def/servlet/SC.web?c=$SPX,uu[h,a]daolyyay[dc][pa875]<i&pref=G
This would suggest that we're probably in for another dip...
Wish I could have had a merrier message to match the season...
KD
Re: Merry Christmas!!!!!
A merry Christmas to you too, Harry, and to everyone else!
If dreams come true, then Sharon and Arafat are now alone on a small island in the Indian Ocean, solving the Middle East conflict with a classic duel (1 bullet, each): The looser get's to live the rest of his life in solitude on the island, reflecting on the damage and pain he's inferred onto mankind.
The winner gets to die and is spared that agony...
KD
23/12 Yahoo buys Inktomi
http://news.moneycentral.msn.com/breaking/breakingnewsarticle.asp?feed=OBR&Date=20021223&ID=...
Price about one third of what Inktomi paid for the Ultraseek search engine (as I remember the price - it was about $800 mio., wasn't it? - you remember, dpb? -Meme?)
KD
18/12 Good news from Oracle
-The good news being that their net profit is flat, compared to last year (10 cents vs. 10 cents) on an insignificantly lower revenue.
The Christmas rally fizzled and sank, but ORCLs data may be a sign that the tide will be turning, soon.
We're far from the 200 day average and an aborted runup will leave us with a bearish head-and-shoulder chart formation.
On the positive side, what the Nasdaq chart is concerned, the MACD does not show direct signs of divergence.
It does, however, for the SP500 chart...
I wish I could be more positive about this, but if we don't break the 200 day average by mid January at the latest, I don't believe we will, this time around...
I'm worrying that at that point, the market will be rattled by a Bush running out of time if he wants to start a new Golf war. We'll probably see a White House kicking up a lot of dust in January...
<<sigh>>
Merry Christmas, all...
KD
It's with war as it is with drugs - you don't need an excuse to say "No!"...
<<sigh>>
9/12: We're down to the 60 day avearge.
That used to be the old resistance and should now - from the upside - offer considerable support.
http://stockcharts.com/def/servlet/SC.web?c=$COMPQ,uu[h,a]daolyyay[dd][pc60!c200][vc60][iUb14!La12,2...
We shall see.
KD
Some sick humor over others misery!
Anyone remember Razorfish (RAZF)? That internet service company that topped at around 100 and since have succeded a 10:1 reverse stocksplit to eventually sell itself for below-market price at $1.70...
Here's one stockholders comments to it all:
http://messages.yahoo.com/bbs?.mm=FN&action=m&board=18366491&tid=razf&sid=18366491&a...
I laughed so hard my stomack hurts!
KD
US Service sector running on "full steam"
(taken from a Danish newspaper):
"The US Service industry is expaning strongly at the moment, shown by the latest ISM-index (Institute of Supply Management).which went up to 57.4 in November from 53.1 in October, for the tenth time over the 50 mark. Expected were 54, according to Bloomberg News.
It is the lowest interest rates in four decades that has spurred refinancing and sale of property, as well as the private care sector, that is sought after, as the American population gets older. The service sector makes up more than 75% of the economy and the latest reading lends credence to the notion of economical expansion."
The best I could find for you, today, folks. But hey - it's not half bad either...
Nasdaq ended on 1430 after a brief rendevous with the 1420 support (a local bottom, I believe).
Resistance as before 1485 (200 day average).
I expect a new attack on it is imminent.
KD
Very interesting week and month to come:
So far, we've had an almost exact repeat of last years runup:
Once the chart broke clear of its downtrend, it found support from the 'classical' 20 day moving average (a typical short-term trend parameter) untill the equally 'classical' 200 day moving average was reached.
Lat year, we bounched down again from that resistance, after testing it throughout December of 2001.
http://stockcharts.com/def/servlet/SC.web?c=$compq,uu[h,a]daolyyay[d20010801,20021201][pc200!c20][vc...
I expect to see something similar, at first - i.e. that the 200 day average won't be broken without a fight between the market bulls and bears.
Eventually, one of them will win!
If the 200 day average holds as resistance, we have (yet again) experienced a bear market rally.
If the 200 day average is broken, it must thereafter revert from resistance to support, in which case we can declare a new bull market.
Good luck, out there!
KD
Have an enjoyable Thanksgiving, folks [EOM]
25/11 - Intraday contact with 200day moving average
was made today. First time since early January!
Ended below and I don't expect it to stabilize above in first attempt.
Whether it will indeed stabilize above, is up in the air, but this is only the second attempt at this trendsetting average, since 2000.
Very interesting times!
KD
DO YOU SINCERELY WANT TO BE RICH?
by Uwe Reinhart, Dept. of Economics, Princeton University
“Get a life! Don’t go to med school. Just buy and sell docs, at a profit, of course”
Sometime during the 1980s, investment bankers on Wall Street hit upon the brilliant idea of purchasing thousands of individual mortgages from local Mom & Pop banks, pooling the monthly cash flow from those mortgages, and then selling in the open market the rights to distinct tranches of that pooled cash flow. The rights to these tranches are conveyed by so-called derivatives called mortgage-backed securities. The investment bankers who engaged in this business grew fabulously wealthy on the arbitrage profit inherent in it. That profit consisted of selling the pooled future cash flow to pension funds, mutual funds and other investors on Wall Street for much more than the price that the bankers had paid the Mom & Pop banks for that same cash flow. It is nothing other than the old buying-low-and-selling-high shtick.
In principle, absolutely anything (or anybody) that throws off a future cash flow can be securitized in this way and, in our increasingly commercialized world, is now being securitized and traded in the market. For example, what had tradition-ally been known as a patient is now known as a BSYC—a Biological Structure Yielding Cash. Because BSYCs throw off cash, they can be securitized, and the most efficient way to do that is to securitize and buy the physicians to whom the BSYCs tend to cling, like bees to a honeycomb. ‘Securitizing patients and buying a doc!?’, you will query incredulously. Sure! It is done. Practically, it means that one buys the physician’s ongoing practice (replete with the list of his or her patients), ties the physician to that practice through a long-term employment contract, and also commits the physician to a long-term non-compete contract that precludes him or her from competing with the buyer of the practice within a carefully specified market area. ‘Long-term’ in this context can mean up to 40 years.
All over America physicians are now busily securitizing themselves in this way, by selling their practices and their future labour to perfect strangers who operate so-called Physician Practice Management Companies (PPMs). The PPMs bundle into one giant cash flow the individual cash flows expected to be yielded by the BSYCs that are expected to cling to the purchased docs. That giant, bundled cash flow can then be re sold on Wall Street at truly handsome arbitrage profits, which can be so huge as to convert the founders of a PPM company into instant millionaires. Sometimes the PPMs may pay the selling docs with cash. But cash is hard to come by, and that could cramp the PPMs style. Therefore, most PPMs prefer to pay doctors with their own stock certificates, which they can print at will. In effect, then, the PPMs can buy doctors with mere hope-and-prayer paper, because the value of a firm’s stock certificate rides on nothing other than the pure hope that the firm will be able to pay future cash dividends that are large enough to justify the current market price of the stock. It is common sense that the more rapidly investors believe the PPMs earnings per share to grow in the future—and thus its ability to pay cash dividends—the more investors are willing to pay today for a share of that stock and the higher will be its P:E-ratio, defined as the ratio of the firm’s current market price per share divided by the firm’s current earnings per share. If Wall Street [temporarily] graces a PPMs stock with a high P:E-ratio, he PPMs management effectively can buy doctors with ‘funny money’, as long as the docs have faith in that funny money. For a while, this can work like a charm.
A major objective in this funny money game, then, is to persuade investors on Wall Street that the PPMs future earnings (and its ability to pay cash dividends) will grow very rapidly, for many years to come. We shall see below how that felicitous imagery can be manufactured with mirrors, at least for a while, and how that manufacture has created many of the new health care millionaires that have, of late, sprouted up all over America’s health care landscape. Alas, naturally the game also has begotten numerous impoverished health care shareholders (widows, orphans and doctors) who ended up with near worthless funny money.
To illustrate this funny money game with some contemporary, real-life numbers, assume that a doctor’s annual gross income (prior to the deduction of practice expenses) were $600000, leaving a net practice income before taxes (but after practice expenses) of, say, $350000. If the PPM bought this doctor and offered him or her an employment contract at a firm annual salary of, say, $300000, then the earnings before interest and taxes (the well-known EBIT) yielded by the doc to the PPM would be $50000 per year. Right now (in 1997), the going market price of a doc appears to be about four to six times the EBIT that he or she will yield the buyer. Therefore, the PPM might pay that doctor $200000–$300000 cash up-front (or much more paper value, if the doc is willing to accept the PPMs stock instead). In return for that up-front payment, the doctor promises not to compete directly with the PPM in the relevant market area for several decades. The PPM pays additional money for the physical assets in the doctor’s practice and for the practice’s accounts receivable. Upon consummation of this deal, the doctor becomes the PPMs salaried employee.
Suppose now that you and a few of your class-mates founded such a PPM and acquired a few hundred docs, either with borrowed cash or, preferably, in exchange for your PPMs own stock certificates, 10 million of which you had printed up earlier. After acquiring the docs and promising Wall Street that you will buy ever more of them, you can sell, say, 7 million shares of your PPMs stock to mutual funds or individual investors in a so-called initial public offering (IPO). Of the re-maining 3 million shares, you might distribute up-front 1 million to yourself and your buddies, as a reward for your visionary entrepreneurship. You might keep the final 2 million shares in reserve as ‘authorized, but unissued’ and use them subsequently as part of the handsome, non-cash compensation that you, as the CEO of this new PPM, richly deserve. Of course, you can always print up more shares when the initial batch of 10 million has been issued. Now it turns out that a PPMs common stock tends to sell at six to eight times EBIT for ‘same-store earnings’, i.e., assuming that there will be no further doc-acquisitions and that the PPMs future cash flow will come strictly from the docs already owned. But if you had bought your docs’ cash flow at, say, five times EBITDA and then resold the bundled cash flow at, say, seven times EBITDA, that already would yield you a neat arbitrage profit.
Yet you could do ever so much better by seducing Wall Street into the belief that you will keep buying more and more docs from here to kingdom come (a process Wall Street calls a ‘roll-up’). If you can keep that game going for, say, 2–3 years, then our ‘efficient’ stock market will believe (or pretend to believe) that your PPMs earnings per share will soar at an annual growth rate, say, 20–30% from here to kingdom come, or at least for a long, long time. On that expectation, the research analysts on Wall Street will sing your PPMs praises, and many managers of mutual funds will be content to pay for your stock a price-to-earnings ratio (P:E-ratio) of between 30 and 50 times your PPMs current earnings per share.3 If your current earnings per share were, say, $2, investors might be willing to pay $80 per
share of your PPMs stock. Thus does Wall Street create the temporarily powerful funny money alluded to above. The trouble is, of course, that to keep the game going you will need to buy an exponentially increasing number of docs, year after year. First, as your PPMs total earnings grow, it will require an ever larger infusion of additional aggregate earnings to keep the PPMs earnings per share of stock growing at 20–30% per year. You can get these ever larger additional earnings only by buying an ever larger number of docs. In the process, of course, you will keep pumping out ever more newly issued shares of stock, which by itself would depress earnings per share, unless total earnings were made to rise commensurately. Because of the need to purchase an ever larger number of docs—each with their own clinical and managerial habits and with a more or less developed information system—there will be no time to integrate all the practices your PPM owns into a co-ordinated clinical network, bound together by well-functioning marketing-, management- and information-systems. All that will come ‘later’, you will assure the analysts on Wall Street. Alas, ‘later’ in this context may mean ‘never’.
Luckily for you, when the game is still relatively young, the stock market seems not to mind, as long as earnings per share keep rising in the short run. On Wall Street, only timid sages take a long-run view, and even they rarely think of the long-run as more than 5 years. In your frenzy to keep earnings per share of stock growing you will find yourself paying top dollars per doc (in terms of your stock’s paper value). As long as Wall Street keeps putting a
high P:E-multiple on your stock certificates; how-ever, this is not a BFD,4 for you can afford to pay each doc several million dollars in stock value without increasing unduly the number of shares of stock outstanding—that is, without seriously ‘diluting’ your PPMs stock. Many docs appear to cave in at the mere mention of an offering price in the millions, even if it is in the form of hope-and-prayer paper. The stock market, for its part, will believe (or pretend to believe) that you have created a veritable growth engine that spews out millions and billions in newly created ‘value’, when in fact you have merely reshuffled pre-existing economic value without creating much if any new economic value. Luckily for you, Wall Street is not set up to distinguish between reshuffled and newly created economic value. Wall Street reacts strictly to hoped for cash flows, regardless of the process that creates these cash flows.
At some point, of course, this funny money game will come to an end. It will end in part because the docs you bought are now your salaried employees. Many of them will have lost the high motivation and productivity that characterizes self-employed owner–operators of business firms (which is what a medical practice is). The salaried physicians will not work as hard as they did before. This will be particularly so as they begin to chafe under the unaccustomed managerial edicts raining down on them from a distant ‘corporate headquarters’ that is run by non-MDs. Some of your doctors will quit outright, to re-establish themselves in another market area. Even-tually, also, you may run out of cheap docs to buy. Either way, eventually ‘disaster’ will strike: even with all of the accounting gimmicks you can purchase from your own flexible accountants and from your flexible external auditors, the time will come when your reported quarterly earnings per share fall a shade or two below the high earnings growth that the stock market had come to expect from your PPM. Even small dips in your quar-terly earnings could trigger a veritable panic among stock analysts and investors, because it might awaken them from the reverie into which you have lulled them with your rosy road-show presentations in prior years. When that happens, your stock’s price will take a steep nose dive, as reality seeps in or as investors, feeling betrayed by you, angrily purge their portfolios of your stock. Once your stock’s value has tanked, it will be much more difficult to purchase ever more docs for funny money, because at a lower price per share you must pump out so many more shares to achieve a given acquisition price per doc. In addition, news of your problem may seep into the financial press, and many physicians will begin to distrust your funny money. Thus starts a down-ward spiral that eventually may cut the value of your PPMs stock to a mere fraction of its all time high.
Naturally, the now salaried physicians whom you bought for the hitherto inflated funny money (and who fancied themselves multi-millionaires) will be furious. ‘Hell hath no fury like a doc financially burned’, quoth William Shakespeare (or might have quoth). Many of your docs will leave your PPM in disgust; the rest may suffer morale problems and lower their productivity yet further.
Armageddon, however, will come when your hitherto passive Board of Directors awakens from its slumber. You had carefully hand-picked this Board to rubber-stamp your every decision, and you had motivated its members to that end by paying them handsomely with the PPMs stock certificates, or with stock options that allowed them to purchase shares in your PPM at prices far below prevailing market prices. Although all of these Board members were your erstwhile friends, naturally they hate to see the value of their imagined wealth evaporate. They may also fear being sued by angry shareholders (your angry docs among them) over some of the fancy accounting gimmicks that your creative accountants undoubtedly will have employed, to meet Wall Street’s earnings expectations. Eventually, in their anger and fright, these erstwhile pussy-cats will try to fire you summarily. Fortunately for you, in their erstwhile role as your hand-picked friends, they had put in place for you a generous golden parachute that will now force them to pay you multiple millions of dollars, just to get rid of you. As you know, such golden parachutes are de rigeur all over corporate America.
Presumably, by the time your stock’s value collapses, you will have sold large blocks of your shares in the PPM for cash. Some of that cash will have been used by you to buy the obligatory mansion in your home state, complemented perhaps by a 20-room haeusele in the Bahamas. There may also be a Rolls Royce, and surely a Porsche, in your N-car garage. Long before your ‘roll-up’ collapses, you will have graced the cover of Inc.or Forbes magazine as the Entrepreneur of the Year, will have supped in the White House, and will have basked in the presence of Lou Dobbs of CNN’s Moneyline, or possibly even in the hallowed presence of Louis Rukeyser. As a highly respected person all around, you will have been invited to sit on many boards—perhaps your alma mater’s—there to dispense your evident vision and wisdom. Now, isn’t this a, like, totally awesome game?
Why then waste away your precious Princeton years in the library, as a pre-med, trying to cope with the academic effrontery called organic chemistry? Why ruin your potentially stunning love life by going to medical school? Why ruin your health and, possibly, your first marriage in the slave-labour boot-camp called residency? Why not just sit back, sip whatever nectar is legal at your age, graduate from Princeton, take a job on Wall Street, and wait a few years, until your nerdy, suffering, exhausted and deeply indebted pre-med classmates finally tumble out of the MD-production pipeline, whereupon you can buy them, bundle them and sell them to Wall Street at a handsome arbitrage profit?
Mind you, so far you can play this doc-for-funny-money game only in America. Physicians elsewhere in the world are still too proud to sell themselves for funny money—or even for cash. But their time will come! Wall Street will get to them, too, sooner or later. It always does.
By the way, you may wonder how analysts and investors on Wall Street can possibly be so gullible as to play along with this gig. How can anyone be this dense? As a general rule, Wall Streeters are not dense. Most of them have been bright students in their time, like you. They merely operate in this case on the famous Greater Fool’s Theory, which leads even smart investors to purchase stocks of dubiously high value, on the theory that there is likely to be a greater fool on whom that overvalued stock can subsequently be unloaded, at an even higher, even more dubious value. After all, a realized positive spread between two dubiously high values represents a solid, non-dubious cash profit. And should an investor on Wall Street be the last and greatest in a chain of fools, usually he or she played the game with other peoples’ money and won’t go barefoot as a result.
Finally: does anyone know of a textbook company interested in buying a little old country economist from rural New Jersey? I’m ready to be securitized. Since students have to buy the text book that I prescribe, can’t you just visualize the cash flow that I could steer to a textbook company that owns me? In fact, do you sincerely believe that making you buy just one textbook really begets high quality learning? Wouldn’t multiple textbooks per course be much better? Hm! I see potential for ‘value-creation’ right there.
An economist at Princeton....
In 1997, an economist at Princeton wrote an assay to some medical students he was teaching about financial gambling in the medicare sector. What he described in his assay was essentially a scam made to generate money to a small group of speculators, on the expence of both patients and investors alike.
The assay was later (in 1999) published in a medical journal called "Medical Economics".
I want to give you a chance to read it, because what he described as a moneymachine that had already culminated when he wrote about it in 1997, his descriptions match pretty precisely to what was then just about to happen to the Nasdaq market and technology stocks in general.
The assay is rather long (3000 words) and I have no idea if or by how much that goes beyond what we can post here. But I'll try and if I have to, I'll break it up in more parts.
The title of the assay is "Do you sincerely want to get rich" and that's a title I will give the post as well
I have the entire article from where I have copied the assay as a PDF file and anyone who wants it can get it from me by e-mail
KD
200 day moving average is in sight!
http://stockcharts.com/def/servlet/SC.web?c=$COMPQ,uu[h,a]daolyyay[dc][pc60!c200][vc60][iUb14]&p...
I expect a small break at some point through next week, to release some buildup selling pressure. Before that, we may of may not have an assault on the 200 day average, but I believe we will have it, immediately after a smallish retraction.
Whether we will break the resistance of the 200 day average, depend on news in the near term:
What could very quickly abbrogate a breaktrough, would be earning warnings from one or two market trendsetters like either Yahoo or Microsoft, Cisco, Oracle, Corning, AOL, EMC, Dell, Intel, AMD... etc...
In the absense of that, I believe we will finally get back above the 200 day average and can we stay above it for a week, we have finally gotten some uptrend support and will be (officially!) in a bull market (as opposed to a sucker-rally).
Last time we had that was in mid 2000.
How about a nice Christmas rally, folks?...
To answer "I wouldn't mind that" would be the understatement of the year!
KD
Re: Summary (Nov. 10th)
...Oh for CHRISSAKE!
Talk about chartreading and prediction of a solid buffer to both moving averages and RSI halfway mark...
It took one - ONE - trading day to eat up it all:
http://stockcharts.com/def/servlet/SC.web?c=$COMPQ,uu[h,a]daolyyay[dc][pc60!a1422][vc60][iUb14]&...
-And another 'Forchrissake': Give me some friggin VOLUME!...
Tuesday thru rest of the week, Bull spirit will stand its second test of commitment and determination.
Closest support: 1300-1305.
Closest resistance: 1420-1425 (resent high as well as previous high of August).
KD