InvestorsHub Logo
Followers 10
Posts 4220
Boards Moderated 0
Alias Born 07/10/2003

Re: gunnabeoneday post# 40868

Friday, 02/10/2006 10:59:47 AM

Friday, February 10, 2006 10:59:47 AM

Post# of 82595
gunnabe, What an interesting theory.

personally i've never bought into that static market cap theory [that you obviously subscribe to] one iota! for if that was true, there would not be any reason, for anybody, to invest into any equity! as all equities would already be priced in perfect equilibrium with the market cap gods....and no gain could be envisioned in such investment by potential investors.

Do I understand you to be saying that the market cap of a company has no relationship to the value of that company? Is it only an arbitrary value derived by multiplying the number of shares by the share price? Does it not change due to the success or failure of the company? If the company succeeds, doesn't the share price increase and by definition the market cap increase? Are you saying that is not a reflection of value?

I only ask these questions to try to understand your position. It would seem to me that if your assumptions were true, there would be no such thing as dilution. Dilution is the reduction in price of a share, due to it's fractional decrease in ownership of the overall company that is reflected by the market cap. I would suggest that according to your understanding of the last 5 months performance, since the pps has not decreased even in the face of 400% more shares, there has apparently been no dilution.

Is that a fair assessment of your position?

regards,
frog