Replies to post #327935 on InterDigital Inc (IDCC)

[jmspaesq]

Count:In one sense the market IS efficient in that its efficiency is a self fulfilling prophecy--how it values things companies etc is the measure of their worth so in the Gestalt sense I guess it is efficient theoretically in that it is ruled by supply and demand and what something is worth is what someone will pay for it.

But specifically in our case, it isn't the markets on Wall Street that will be buying IDCC using their typical metrics of EPS PE ratio earnings and revenues models but companies that want our IP who will determine what it is worth by what they will pay for it--Wall Street has little or nothing to really say about it and I don't think that WS as a whole gets the story of this company or fundamentally the emerging story of IP as an asset class and how to value it.

I also think that more generally there are lots of problems with the theory of market effiency including examples that I cited (how did we get too big to fail but on the verge of failing because of a convoluted series of transactions that were fundamentally stupid in the first place--betting ON banks that had made pretty clearly bad loans???

Or not a boom and bust but the markets failure to predict it and so many others--when one could look and see that we were in a bubble and it had to burst sometime...so the wisdom of the market seems very hindsighted rather than foresighted to me...and it seems like a self fulfilling prophecy to predict and value things in retrospect--that isn't helpful to investors who have to make decision prospectively...

And there are lots of things going on in the markets that detract from efficiency including manipulation, a large 'black market' that people don't partipate in, and only a limited number of even the big boys aren't even in...and there are a number of things that fail to level the playing field and things that could be even be done to level the playing field that aren't done so ultimately it is not a truly free market it is rigged and that means it is not in its natural state of rationality or effiency...

So in a sense is the market inefficient because it values things at a moment in time by supply and demand--yes but that is the self fulfilling nature of the theory of market effiency and rationality--to me an efficient market and one that is rational has a broader meaning in that there has to be a reason something is worth X that was rationally arrived at but without much if anything changing can be worth Y the next day...

I'm not an economist so maybe I'm taking words that have english language meaning that I'm relying on but in the context of economics if rational and efficient are terms of art where the market determines the worth of something and that is the worth of it at the moment because that is what someone will pay for it and there is some efficient means of exchange and of determining a price--I't givng the words efficinent and rational different meanins, [

[Stock Curmudgeon]

but it is at the tail end of the bell curve.

Please remember, though, the final Nortel bids were not even on the bell curve Mr. Market had drawn.

[Rmel26]

About Call Option Writers:
I would think that there's a lot of hedging activities going on. A call writer could be long the Aug 120, but then bought the Aug 110 as a hedge. The writer of the Aug 100 could then be a buyer of an Aug 100. Ultimately, you could then have a writer of a call actually holding the stock. So in this set, you could have several options written and bought, and related to 100 shares of stock. In the same context of puts, it may be related to 100 shares of shorted stock.

All this option writing and hedging may be bets of price decay before the target strike is achieved.

I also don't think there are so many stupid call writers willing to sell lottery tickets paying 100 to 1 and more on something that is probable