Dummheit und Gier - 500 Beiträge pro Seite

[abc1]

Wenn ich zur Zeit die Threads im WO-Board überfliege, habe ich den Eindruck, daß sich hier nur noch Giga-Zladkos, Giga-Trottel und andere Gurus zu Wort melden (die wenigen vernunftbegabten Teilnehmer wurden ja inzwischen großteils gesperrt oder haben resigniert). Für die verbliebenen (hallooooooo....ist da noch jemand?) und für die neu hinzugekommenen habe ich hier einen, wie ich finde sehr "lehrreichen" Kommentar eines pensionierten Brokers:


PAYING TOO MUCH FOR "HIGH TECH"

During a mania, "investors" ALWAYS get carried away with the self-fulfilling prophecy of their enthusiasm. Most times, the investment scenario is correctly analyzed and the long term picture is well defined. HOWEVER, no matter how bright the projected future might be, YOU CAN ALWAYS PAY TOO MUCH FOR THAT FUTURE. How much is "too much" ?? Well, "Too Much" is whatever the price might be once the concept has been "discovered", hyped, and passed on the general public.

Today, it`s Internet infrastructure, e-commerce, wireless communication "plays", or whatever complexity is beyond the average person`s range of comprehension. If you don`t understand it, buy it. If your broker doesn`t understand it, buy even more. It`s not whether the company makes any money, or has any cash flow, or even has a management team. THE ONLY THING THAT MATTERS IS WHAT A COMPANY DOES. The "dream" is all that matters, AND as long as others come in behind you to "play" that dream, you can make money. That`s the essence of "greater fool" investing.

Perhaps, the greatest "High Tech" play in modern history was Radio Corporation of America (RCA). If we compare its ascendancy to ANY other dynamic "play" in stock market history, RCA clearly dominates the historical record, when placed into the context with the stock market of ITS day.

In early 1929, the concept of "wireless" communication being disbursed throughout the consumer market, made available to the general public, was far more profound than the mass introduction of today`s public Internet. The Internet, by comparison, is rather trivial, in a marginal sense, compared to the radical transformation of our society, culture, and economic system caused by radio. RCA was THE way to play the radio boom. After all, it had "radio" in its name! Consider the "fundamentals" and you can understand enthusiasm for the stock:

From 1923 to 1927, sales jumped from $27 million to $65 million. Earnings per share went from $.06 to $6.15. The stock price went from $3 per share to $100. Sooo,coming into 1928, with the market booming, "Radio" became the anointed one to lead the charge into the 1929 top. The stock attracted all sorts of "recognition" and became the darling of all the "pools" (today`s hedge funds) and investment trusts (today`s mutual funds) and floor traders (day traders) and highly leveraged public "players" (today`s highly leveraged public players).

By early February 1928, the stock had dropped back to 85, where it was selling at 14 times 1927 earnings per share. By the end of 1928, sales would rise from $65 million to $102 million and EPS would triple. Therefore, at 85 the stock was cheap, selling for only about 5 times what it would earn in the coming year. The pros suspected this and started to buy the stock heavily. By early March, the stock had moved up from 85 to 97. By the end of March, it had reached 168, and the short sellers were trapped. As the shorts tried to reverse their positions, the big pools just kept buying and by the end of 1928, the stock had reached a high of 420, before backing off to close the year at 375. (Is this starting to sound familiar?)

At this point, with the stock selling for about 22 times earnings (considered a high P/E at the time), it became "anointed" as the greatest stock market "bet" of all time. By now, the concept was so well articulated that literally "Everyone" knew they should buy RCA.

Now, back up and take a snapshot: 1928 sales: $102 million; Earnings per share: $15.98; Stock`s 1928 high: 420; Shares outstanding: 1,155,400: "Floating supply" of publicly traded stock: 400,000 shares (the rest was owned by General Electric, Westinghouse, etc.); Total shares traded in 1928: 16,179,800. THE STOCK TRADED SO HEAVILY THAT ITS ENTIRE CAPITALIZATION TURNED OVER 15 TIMES. The "floating supply" of public stock turned over 40 times or almost once a week! But the best was yet to come.

In early 1929, the company announced that magic event: a 5-for-1 stock split! Ahhh, NOW it was party time! (Sound familiar?) On March 8, 1929 RCA closed at 445 up 38. The "New" stock, on a when-issued basis, traded up to 89, up over 7. Now get this: THE PRE-SPLIT STOCK TRADED 28,600 SHARES. THE "NEW" STOCK TRADED 630,200 SHARES. TOTAL VOLUME ON THE NEW YORK STOCK EXCHANGE WAS 3,945,400 SHARES. RCA alone, accounted for 17% of all the trading volume that day! (Imagine MSFT or CSCO trading 170 to 200 million shares per day)

Over the next seven trading days, RCA climbed to 549 pre-split (109 "new"). Average total daily trading volume in the stock amounted to 10,000 shares in the "old" stock) and 456,000 shares in the "new" stock. If we adjust the "old" for the "new" total RCA trading amounted to more the 500,000 shares per day. THE ENTIRE MARKET AVERAGED 3,600,000 SHARES DURING THAT TIME PERIOD! RCA accounted for 14% of all the NYSE volume! This March episode became known as the great RCA corner, where the short sellers were trapped by the pool operators. By now, there was virtually no one left on the planet who had not heard about the great "growth opportunity" presented by a fling in RCA common stock. It`s important to remember that heavy trading volume reflects widespread recognition of a prevailing trend. It is very late in the game to be "playing".

By the end of March 1929, the corner was broken, the stock dropped from its post-split high of 109, back down to 87, then caught a second wind as the "big boys" (bank managed investment trusts, run by slow-witted committees) ran the stock back up to 114 in early May, accompanied by frenzied public buying from almost a million margin accounts. BUT, trading activity was very "heavy" in the sense that big volume produced relatively small price changes. THE PROS WERE SELLING TO THE AMATEURS.

Now, snapshot 1929: Sales came in at $182 million. Earnings per share dropped back to $1.58 ($7.90 on the pre-split shares). The stock fell back in the summer, then made yet another big run into September 3, 1929, where it reached its old high of 114. By this time, the clarion call on Wall Street was "You can NEVER pay too much for Radio!" A huge "double top" was formed in the stock with a May and September high at 114. The "great unwashed" had become a heavy buyer while the really smart money had exited. At its peak in 1929, RCA was selling for 72 times lowered earnings per share, but "only" 36 times previous year`s earnings per share. The final 1929 number wasn`t "known" when the stock hit 114 but it simply didn`t matter. After all, you could not pay "too much" for Radio.

EPILOGUE: From 1929 to 1974, RCA`s annual sales grew from $182 million to $4.6 billion. In 1966, at the peak of the color television boom (mania) RCA stock FINALLY crawled back to its old 1929 high. Eight years later, at the bottom of the 1973-74 bear market, RCA sold for about one third of its 1929 peak. IF THOSE BRAVE BUYERS AT THE 1929, PEAK FAILED TO CASH OUT WHEN THEY "BROKE EVEN" IN THE 1966 MANIA, THEY WOULD SEE TWO THIRDS OF THEIR INVESTMENT EVAPORATE BY THE END OF 1974. However, most of them probably sold out or were forced out when the stock dropped from the 1929 high of 114 all the way down to 2 (yes, two) in 1932.

My point here is simple. You CAN pay too much for an investment. If you ever think otherwise, go take a cold shower! This rule applies to LONG TERM INVESTMENT, not short term trading. For a trader, price doesn`t matter. Only quick wits, steel nerves, strong discipline, plenty of humility, and deep pockets. The only "price" that matters to a trader is the one higher than what you paid. Unfortunately, a huge number of today`s new investors equate short term hype with long term investment. There is nothing "wrong" with short term trading, IF YOU KNOW WHAT YOU`RE DOING. But most people don`t, and rely on their misplaced expectations of what "long term" means. If that "long term" has been incorrectly priced, then as an "investment", it could prove to be a disaster. THAT`S WHY THE MATHEMATICAL RULES OF CONVENTIONAL INVESTING HAVE "MATTERED" FOR GENERATION AFTER GENERATION. There really is nothing new under the sun.


Vielleicht gibt es ja doch noch den ein oder anderen, für den diese kleine Geschichte von Nutzen ist.

[AlexiusStrategist]

Hallo ,ich finde dein Beitrag super.
Das ist echt so.Jedoch überlege,nicht jeder beherrscht die englische sprache perfekt.
Mit respekt
http://www.amainvest.de

[abc1]

Lieber AlexiusStrategist,

auch ich beherrsche die Englische Sprache keineswegs perfekt. Dennoch denke ich, daß jeder der in HighTech- und Internet-Werte (schon wieder 2 englische Worte) investieren will, genug Sprachkenntnisse haben sollte um die wesentlichen Aussagen des Autors zu verstehen, auch wenn der Wortwitz dabei auf der Streck bleibt. Zur Not kann man den Text ja auch durch den Altavista-Translator jagen, dann wird es sogar wieder witzig.

Im übrigen kann ich folgende Wörterbücher sehr empfehlen:
www.babylon.com (Wörterbuch mit eingebauter OCR-Software, freeware)
dict.leo.org (online-wörterbuch)

mfg, abc

[AlexiusStrategist]

Ich hab den Babylon translator,ist sehr gut ,benutzt meine Frau manchmal.
Mit respekt