Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Path: utzoo!yetti!geac!daveb From: daveb@geac.UUCP Newsgroups: can.politics Subject: Re: market crash Message-ID: <1846@geac.UUCP> Date: Tue, 17-Nov-87 07:58:42 EST Article-I.D.: geac.1846 Posted: Tue Nov 17 07:58:42 1987 Date-Received: Thu, 19-Nov-87 03:03:31 EST References: <11436@orchid.waterloo.edu> <1034@utflis.UUCP> <2191@lsuc.UUCP> Reply-To: daveb@geac.UUCP (Dave Collier-Brown) Distribution: can Organization: The little blue rock next to that twinkly star. Lines: 35 >>>dave@lsuc.UUCP (Dave Sherman) writes: >>>The value of the company is, by definition, what the market sets. >... >The "value" of anything is what it's worth -- what someone is >willing to pay for it. The stock market is the ultimate >example of setting such a value "in the market". I'll happily agree with the first two sentences (of a discussion of "book value" versus real value), but I question if the stock market is representative of the marketplace. I suggest that 1) Companies traded on the exchange make up a numerically small part of the economy, but make up a proportionally larger part of same. (Hmmn... a large minority if memory serves... corrections invited). 2) Companies traded are sufficiently large that wholesale purchase or disposal is uncommon (ie, that wholesale purchase or disposal of one is newsworthy). 3) The mechanism of allowing easy trading in small portions of large organizations (without dismembering the organization (:-)) causes behavior patterns in the trading which results in share prices which do not necessarily reflect the worth of the company if it were privately held and sold as a single business unit. It is not apparent to me whether the price of a "small business sold whole" or that of a "large business sold share-by-share" is the proper definition of its real worth. I suspect the former, but I also suspect this may be a religious question. --dave -- David Collier-Brown. {mnetor|yetti|utgpu}!geac!daveb Geac Computers International Inc., | Computer Science loses its 350 Steelcase Road,Markham, Ontario, | memory (if not its mind) CANADA, L3R 1B3 (416) 475-0525 x3279 | every 6 months.