On 2008-02-15, Erik Funkenbusch <erik@xxxxxxxxxxxxxxxxxxxxxx> claimed:
> On Thu, 14 Feb 2008 16:39:13 -0800, Jim Richardson wrote:
>
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>> On Thu, 14 Feb 2008 17:34:28 -0500,
>> Erik Funkenbusch <erik@xxxxxxxxxxxxxxxxxxxxxx> wrote:
>>> On Tue, 12 Feb 2008 16:47:54 +0000, Roy Schestowitz wrote:
>>>
>>>> Erik's claim is indeed very bizarre. Is he out of this world? If someone quits
>>>> MSFT, why buy YHOO, which Microsoft wants to grab? Just commission going to
>>>> waste...
>>>
>>> Microsoft's buyout bid was something like 1.5x the current asking price of
>>> Yahoo stock. If you sold $100 worth of MS stock and bought $100 worth of
>>> Yahoo stock, then when MS bought it, they'd convert that $100 in yahoo to
>>> $150 in Microsoft, making a 33% profit.
>>>
>>> Is that so difficult to understand?
>>
>> MS lost over 40 billion $ in market cap, Yahoo did not gain over 40
>> billion $ in market cap, ergo, the drop in market cap of MSFT was not
>> due to people selling MSFT stock in order to buy Yahoo stock.
>>
>> Is that so difficult to understand?
>
> If that were the way it worked, sure.
>
> People selling their shared do not reduce the market capitalization. If
> enough people sell shares, the market becomes glutted and the price goes
> down, but that's not directly related to selling shares, it's a
> side-effect.
>
> If I sell $100 in MSFT stock, their market cap doesn't go down by $100.
> Hell, it probably wouldn't even affect the price at all. If I sold
> $1,000,000 worth of MSFT stock, then the price might go down, but the
> market cap would not drop $1,000,000.
>
> Similarly, a run on buying stock might drive the price up, especially if
> there is a shortage of shares available, but it's not a $1 = $1 thing,
> unless you're buying the shares directly from the company (ie, newly
> issued).
Let me get this straight. What you're saying, in effect, is people may
have sold muuch more than $40B in MSFT to buy less than $40B in YHOO?
--
I don't fear Government, I fear the fools that elect them!
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