Thursday, May 30, 2002

Here is a small post on stock ownership.  What do people buy when they buy stock?  The books say that you buy rights to a share of future cash flows.   However, stocks don't work like that.  It used to be that companies looked more like bonds; they distributed excess earnings as dividends to shareholders.  That doesn't happen anymore.  Most companies, like Microsoft, hoard cash and they don't pay dividends. Does anyone truly think that Microsoft will ever distribute its profits to its investors?  No.  Doesn't everybody expect Microsoft to eventually end up in the dustheap of failed monopolies?  Yes.  So what are people buying exactly?  Microsoft can't be acquired by another company at the current price.  It is too expensive.  If it ever is, it will be at a small fraction of its current price and its cash hoard will be squandered defending its failing monopoly.  This all goes to prove that the current market is a abstraction, almost to the point of fiction.  Hey.  If you are smarter than me on this, please let me know.  I will post all excellent responses. [John Robb's Radio Weblog] this is interesting -- especially as you watch MSFT's cash warchest balloon (three years ago, it was $20B; if I recall correctly, it's now at $40b). The theory is that they hold on to the money because they can do a better job of investing it than their investors can. Clearly, this isn't the case, since they don't appear to be doing anything with it. Think about how many Xbox-sized things they could try and fail at without even denting that horde. I imagine that theory would say, given that they are holding on to money that they demonstrably can't do a better job investing, at some point, people will penalize them for this by dropping their stock price. 5:04:53 PM

19. Pressflex.com - The webmaster for publishers: Blogonomics: making a living from blogging (5.3 points). Blogonomics: making a living from blogging [( blogdex : recent )] 10:06:07 AM

5. Personal RSS Aggregators (8.0 points). Jon Udell ... More > [( blogdex : recent )] nice summary of rss aggregation UIs 10:02:26 AM

United Linux is Here [Slashdot: News for nerds, stuff that matters] 7:21:05 AM