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My original contention is that a decline in market
capitalization is a meaningless number since for every loss, someone's else
gains, not necessarily someone in the market. In the Japanese real-estate
example the banks may have been the looser but others gained, if the borrowers
foolishly squandered the money on country club memberships then it was the
country club who gained.
In the case of lastminute.com you said "they burned
thru the money", not "they burned the money". In other words they spent
it. You can not exclude the IPO, I suspect the gainers where the banks and
the venture capitalists who took it public. And, THEY COULD NOT HAVE DONE
SO IF PEOPLE WHERE NOT HYPER-GREEDY, since no rational person would buy
something with no value.
Money can be either concentrated or defused.
If I make a fortune in any venture, I am concentrating wealth. When I
spend (or lose) that money I am defusing it. There is only one way to
create money, thru the input of human energy in the form of work (mine ore,
convert to steel, mill to raw materials, form to products, ship to stores, sell
product). Even an intellectual property requires work to create.
There is only one way to destroy money once created, thru inflation caused by
government. Thru government policies, inflation can rise faster than work
can generate money.
The problem we are undergoing is that vast numbers
of people "FELT" wealthy, smart, powerful (add your own adjective here),
when in fact they where just GREEDY and IGNORANT. Yes, in a few
cases they where deceived but remember, you can not cheat an honest man and you
can not take money in the market from someone who is not
greedy.
Good luck and good trading,
Ray Raffurty
<BLOCKQUOTE
style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
<A title=bruce.larson@xxxxxxxxxxxxx
href="mailto:bruce.larson@xxxxxxxxxxxxx";>bondo92677
To: <A title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Thursday, August 01, 2002 4:48
PM
Subject: Re: [RT] bear market stats
Transfer yes but not necessarily this polarizing transfer
of wealth. Obviously there had to be a few transactions at the highs
or else there wouldn't be any market price. Not too many people
could afford Japanese real estate at its peak. I can assure you not
too many were selling because captial gains tax rates are
prohibitive. It kinda went up and down in a vacuum. Sure, the
bank's were willing to lend plenty based on the land's perceived appraisal
value and that money went into stocks, golf course memberships and home
improvements. I have no idea where Bernie got his shares but I get the
feeling he bought it at a discount from Worldcom and borrowed heavily to
buy it.In the case of Nasdaq stocks obviously there was plenty of
volume at the highs so certainly many cashed out with riches. But
all I'm saying here its theoretically possible that an asset can fly way
up and crash down and everyone can be poorer except for the issuing
company and the fed gov't throught taxation. I remember in the UK,
there was a well publicized IPO aptly named Lastminute.com (I think)
that went public in mid-March 2000 exactly at the peak. I don't
think the stock ever saw the light of day. The only one who
benefitted was the issuing company and I'm sure they've burned through
the cash and shut their doors by now.
--- In realtraders@xxxx, "Ray Raffurty"
<r.raffurty@xxxx> wrote:> If everyone bought a stock at 100
someone had to sell it at 100.00, the fact that no one else is foolish
enough to buy it is not relevant to the transfer of wealth. If
someone had a $300 M margin call it is because he purchased $300 M worth
of stock from someone, he just did it with borrowed money. The
Japanese purchased their real-estate from someone.> > There
is ALWAYS a transfer of wealth in every transaction (even theft).>
> Good luck and good trading,> > Ray Raffurty>
> > ----- Original Message -----
> From: bondo92677 > To:
realtraders@xxxx > Sent: Thursday, August 01, 2002 12:16
PM> Subject: Re: [RT] bear market stats> >
> Yup, just ask Bernie Ebbers. $300million margin
call wasn't it? The > Japanese had limitless real
estate wealth in the late 80s but could > not sell
because of high tax rates. They leveraged their assumed
> wealth until all the dominoes fell.>
Wealth does evaporate without transfer. A stock does not have to
> change hands to go lower. No bids = lower
price. Everyone owns it > at $100. Next
morning its at $10. The only winners are the corp > issuer
which in the case of tech burned up the cash pursuing >
profitless dreams and the fed gov't which taxes you on your worthless
> unexercised stock options. > > >
> --- In realtraders@xxxx, "Ray Raffurty"
<r.raffurty@xxxx> wrote:> > Wrong, wrong, wrong,
wrong, wrong, wrong, wrong, wrong, wrong, > wrong, wrong,
wrong, wrong, wrong, wrong, wrong, wrong, wrong, wrong,
> wrong, wrong, wrong, wrong, wrong, wrong. If you
believe this, STOP > INVESTING/TRADING NOW. You
are in great danger.> > > > You
are only "wealthy" on paper. You have NO wealth until you take
> profits. A bank will gladly loan you money on 50%
of your paper > wealth, then sell 100% of the position (or
whatever % is required to > make THEM nor you whole if
the stock drops below 40%) at any cost to >
you.> > > > Good luck (you'll need
it) and good trading.> > > > Ray
Raffurty> > > >
> > ----- Original Message -----
> > From: Steve Walker >
> To: realtraders@xxxx > >
Sent: Thursday, August 01, 2002 11:34 AM> >
Subject: Re: [RT] bear market stats> >
> > > > Wealth does
disappear to the extent the market moves higher after >
the> > purchase and then
retreats.> > > >
>>> r.raffurty@xxxx 08/01/02 10:30AM >>>>
> Recently the Democrats have been harping on the 7.7 trillion
loss > in> > market
cap. This shows a total lack of understanding on how
> markets> >
work.> > > > If a
person is stupid enough to by stock in Dr. Coop.com (fill in
> your> > favorite dead
stock) at $80 they deserve to drive a Dodge Omni >
with> > 100,000 miles (they probably paid
2995.00 for that too).> > >
> The point is that the 7.7 trillion dollars did not disappear,
it > just> > changed
hands. The uninformed and greedy sucker ALWAYS gets >
clipped. > > CNBC just ran a report about a
couple that lost 75% of their > account
in> > JDSU. Their kid wants to go to
Duke University, so they are > moving,>
> riding the subway, etc. He was man enough to admit it
was his > fault,> >
but fell short of admitting it was GREED, pure and simple, that
> made him> > buy an over
priced stock and IGNORANCE that prevented him from>
> protecting his position with options or even stops. The
person> (s) who> >
sold him JDSU at the top are driving the Porsche because they
> recognized> > that the
market could not go parabolic for long.> >
> > If there is a case of fraud, a stock
holder would have a > legitimate>
> complaint and new laws may address some of this by returning
ill > gotten> >
grains to investors (if the feds can find the assets). However
> in most> > cases this
is not applicable. The vast majority of losses are
> caused by> > GREED
coupled with IGNORANCE. Now the great masses are crying to
> their> > congress man
"They never told me I could lose".> >
> > Good luck and good
trading,> > > > Ray
Raffurty> > >
> ----- Original Message ----- >
> From: SLAWEKP@xxxx >
> To: REALTRADERS@xxxx >
> Sent: Thursday, August 01, 2002 6:03
AM> > Subject: [RT] bear market
stats> > > > >
> > > >
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