GDP, M&A, EBITDA, P/E, NASDAQ, Econo-thread Part 12

[el freako]

Originally posted by DanS
ef: New WAGs from Census showing 1.1% pop growth rate July '01 to July '02...

http://eire.census.gov/popest/data/s...2002EST-02.php

Thanks DanS, that makes the 0.3% rise in the workforce to november even more puzzling (especially as the working age population is rising slightly faster than the population as a whole)

[TCO]

Originally posted by el freako


Thanks DanS, that makes the 0.3% rise in the workforce to november even more puzzling (especially as the working age population is rising slightly faster than the population as a whole)

I thought you all didn't trust yearly population growth figures. Consistency, people!!

[TCO]

Originally posted by HershOstropoler


"Well, the population estimates show that the peak of growth for population was in the early 1990's"

I have the census office guesstimates:
Jan 1990: 248.8
Jan 1995: 264.8
Jan 2000: 280.7

That looks pretty even. Also those nrs are recalculated; given that they erred by a couple million for their 2000 estimate, I do not put much faith in their reconstruction of the annual developments.

"Even" growth over the decade would still contradict your point that population growth was bubble-driven. (And the rate is still higher in the non-bubble time than in the bubble time: 1.25% versus 1.17%).

[Sten Sture]

proof of population growth being non-bubble driven...

[DanS]

Woohoo!

And when did Hershell start writing for The Washington Post?

http://www.washingtonpost.com/wp-dyn/articles/A24843-2002Dec22.html

[Saras]

Sten, what a doll! Boy/girl? My wife nearly fainted . Mantas is keenly looking at him/her as we speak

[Sten Sture]

Saras - he is one of those higher average wage earning males; though if he ever reads this thread, he will want to be a dentist. Neal sends his best three day old wishes to Mantas.

[Adam Smith]

you beat me to it Dan.

[DanS]

Actual, real, honest-to-goodness cash starting to change hands for internet companies....

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1039523937169&p=1012571727092

Amazing. We have now seen everything.

[Sten Sture]

Amazing that Inktomi was "valued" at $33.9 billion. They have had year to date sales of just $121M and lost $131M in the third quarter alone. It is just patently absurd that Inktomi's valuation was $34B, and to blame the Fed for such blatent investor stupidity defies reason.


Lets review again...

The internet never accounted for much of GDP - fractions of a percent. Most of the stocks that achieved hyper-lofty valuations had very small share floats (less than 10% of total shares) and had significant shares locked-up in restricked accounts. Supply and demand baby. Once the supply came on board the scheme was up. And no amount of Fed intervention would have changed what happened. The only thing that could have been done would have been to have the SEC refuse to allow small float IPOs, disallow lock-up periods for employee holdings, and allow perpetual shorting without delivery. All three of those things are ridiculous under continuing circumstances. Blame who you want, but it wasn't the Fed. The SEC, AIMR, the capital gains tax break, CNBC and retail Wall Street versus dumb investors - eventually the dumb investors get it right.

[Colonâ„¢]

Seems I missed the latest news from SF. Congrats Sten.

Originally posted by Sten Sture
Amazing that Inktomi was "valued" at $33.9 billion. They have had year to date sales of just $121M and lost $131M in the third quarter alone. It is just patently absurd that Inktomi's valuation was $34B, and to blame the Fed for such blatent investor stupidity defies reason.


Lets review again...

The internet never accounted for much of GDP - fractions of a percent. Most of the stocks that achieved hyper-lofty valuations had very small share floats (less than 10% of total shares) and had significant shares locked-up in restricked accounts. Supply and demand baby. Once the supply came on board the scheme was up. And no amount of Fed intervention would have changed what happened. The only thing that could have been done would have been to have the SEC refuse to allow small float IPOs, disallow lock-up periods for employee holdings, and allow perpetual shorting without delivery. All three of those things are ridiculous under continuing circumstances. Blame who you want, but it wasn't the Fed. The SEC, AIMR, the capital gains tax break, CNBC and retail Wall Street versus dumb investors - eventually the dumb investors get it right.

1.regarding limited floats, I didn't understand the reasoning of the investors back then and I don't understand the reasoning of the critics now. Shares aren't cars, since you buy them to get a return on investment. If such a float prevents everyone getting a piece then why should they have bid up thereby decreasing the return? For instance, there are plenty of companies of which the shares are mostly owned by a family holding but you don't see this supply vs demand effects there. The real problem is that people bought shares because they 'had' to buy them, any rational calculation about ROI be damned.

2.you still need money to buy shares. You can blame investors for tossing away rational calculations and banks for abusing this madness, but the fed also stimulated if not caused the bubble by providing cheap credit and plenty of cheers about the productivity miracle. The fed could have taken away the construction materials the nutcases used to build their castles in the sky, but it didn't.

[TCO]

Originally posted by Colon
Seems I missed the latest news from SF. Congrats Sten.



1.regarding limited floats, I didn't understand the reasoning of the investors back then and I don't understand the reasoning of the critics now. Shares aren't cars, since you buy them to get a return on investment. If such a float prevents everyone getting a piece then why should they have bid up thereby decreasing the return? For instance, there are plenty of companies of which the shares are mostly owned by a family holding but you don't see this supply vs demand effects there. The real problem is that people bought shares because they 'had' to buy them, any rational calculation about ROI be damned.

I agree. If anything a small float should reduce value of shares because of illiquidity and because of governance/control concerns (but at first order price should be indifferent).

2.you still need money to buy shares. You can blame investors for tossing away rational calculations and banks for abusing this madness, but the fed also stimulated if not caused the bubble by providing cheap credit and plenty of cheers about the productivity miracle. The fed could have taken away the construction materials the nutcases used to build their castles in the sky, but it didn't.

I disagree. A stock can appreciate without any new funds. Could close one day and open another day way higher (say on news of a wonder drug discovered). Yes, actual money was invested in the servers, staffing, telecom cables, etc. of the boom. But that is different from stock price appreciation.

I think the Fed should be indifferent to investor booms. You are not so much criticizing them for funding the boom as for failing to stop it. If I invented a techique to transmute seawater to oil resulting in $1.00/barrel oil, the entire market (save energy stocks) would RIGHTFULLY jump. If a major war starts (or OPEC becomes more effective), it rightfully drops. This happens without any action by the Fed. No action is needed by the Fed. Market can jump or drop on its own. And it will do so, based on changing collective beliefs. During the 1990's there was a belief that the Cold War was over, that the internet would drive incredible productivity imporvements, etc. The market thought this was a seawater transmutation event. It's not the job of the Fed to decide which GP sewaater transmutations are correct or which are wrong. It's the job of the market. Let it make its own guesses.

[TCO]

oops

[Saras]

GP, I believe the idea is that the Fed should not become a cheerleader for one or another seawater transmutation method. But it did, and it "believed" that particular water transmutation was for real.

And if I may, that's one big GP post .

[Saras]

The on above "oops", that is