The World Economy: Some Data - Page 6

On August 30 2013 03:34 GreenGringo wrote:
Skipping to the main thrust and cutting all the irrelevant filler, we have:

Agriculture contributes 12% of Australia's GDP and isn't to be scoffed at. However, you raise an important point. My response would be that, apart from agriculture, large land area confers the following advantages:

(1) Much easier planning and macromanagement. Nobody wants to constantly have to demolish buildings from the 18th century. Nobody -- with the exception of the owners -- wants expensive land where everywhere is built.
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On August 30 2013 23:36 legor wrote:


I really do not want to make fun about your economic illiteracy. How can something be expensive if no one wants it?

On August 30 2013 22:25 Rassy wrote:
Think its no mystery, a huge amount of shares have to be sold in a short period of time, wich is only possible if they are priced competitivly.
Its not so much that the ipo is to low, its more so that the prices 2 years after the ipo are often to high.
During an ipo institutional investors buy the shares for the biggest part, They are not going to sell them in 1 year or even 10 years usually.So after the ipo there are relativly few shares freely available while the demand for them is more or less continuous existing, wich makes it easy for the price to go way above the "true value"

Another nice example of an ipo is royal ahold. In 2001 the company went bankrupt basicly,due to fraud in its american devission. The company had to emit shares at ~ 2 euro each. We are now 10 years later and the shares are at 12. The company realy didnt become 6 times more valuable over the past 12 years. That is basicly impossible for the defensive sector ahold is in. Still the shares have gone to 12 easily only because the people who initially bought the ipo are refusing to sell and hoarding their stocks.
Now that 10 years are over thoose intitial investors are slowly wanting to sell and the way they are going to sell without crashing the price is interesting. They made ahold starting a share buyback program (as soon as a company announces a share buyback program you now that it is time to sell...) so that they can sell back their 2 euro stocks to the company for 12 euro each without crashing the price, the company goes along with this because the people wanting to sell their shares have a huge influence over the company, due to the amount of shares they have.
Ahold is a safe short for the long term if the overall market stops rising and starts consolidating.

This is the same game as was played with KPN.... In 2000 kpn emitted shares for ~ 2 euro each. In 2009 the company started a share buyback program buying back the shares for ~ 10 ea. And now in 2013 the company is emitting shares again, selling them for 1,20 each...(yes, the same shares the company bought 4 years ago for 10 ea, though you now need 3 times as manny shares for the same percentage of ownership, making the price comparison a little less bad with 3.60 vs 10 but with 2.40 extra cash deposited per share wich the 10 euro shares didnt have)
Its hilarious (outright criminal) what is happening lol.
Buying back shares is one of the bigger scams in the financial markets. It is said that companys do it to give monney back to the share holders but why not simply raise the dividend then?? When buying back shares the monney is only going to ex-shareholders...thoose people who sold back their shares.
So what you have to do is join them, whenever a company anounces a share buyback you should sell. It might not be the absolute top but you can be sure it is verry close.
Apple is starting a share buyback as well, so apple wont rise much more (wont go above previous top i think) and will go in a long term decline as soon as the share buyback program is finished (within 2 years i asume), this prediction i dare to make and put monney on.

On August 30 2013 07:47 Crushinator wrote:


Yes you could still lose on any individual transaction. (though losses are very rare in IPOs anyway). But the idea is to make the amount you end up buying independent of the interest in the offer. So you will always buy the minimum allotment, meaning that you dont get more of the bad and less of the good, just equal amounts in everything. You dont go for the auctions, just the underwriting stuff.

I'm not a hundred percent sure if this logic is perfectly sound, but it should be close enough. I'm not a hundred percent sure if you can keep 10k occupied for a decent amount of the time either, but if I had that amount saved, it would be interesting to give it a go.

On August 31 2013 00:34 Crushinator wrote:


There is definitely mystery around IPOs and a comprehensive economic explanation for why they are so underpriced is a topic of ongoing research. YOur comment about the prices after 2 years make no sense at all. The two year price is utterly irrelevant to day 1 returns, and the long term performance of stocks after an IPO is fairly poor on average. Which is another part of the IPO mystery. Buying back shares is not any kind of scam, it is just a way to return excess cash to shareholders and has no criminal or shady element to it at all. Dividends are indeed another way to do it, but the result is exactly the same, there is literally no difference when you do the maths. Nobody is damaged in a share repurchase.

I dont understand why you insist that a company is not worth what people are willing to pay for it. I would also like to point out that both your cases are not IPOs but rather seasoned equity offers. Which makes a rather big difference. There really isn't very much in your post that makes any sense at all, to be honest.

On August 30 2013 03:34 GreenGringo wrote:
Skipping to the main thrust and cutting all the irrelevant filler, we have:

Agriculture contributes 12% of Australia's GDP and isn't to be scoffed at. However, you raise an important point. My response would be that, apart from agriculture, large land area confers the following advantages:

(1) Much easier planning and macromanagement. Nobody wants to constantly have to demolish buildings from the 18th century. Nobody -- with the exception of the owners -- wants expensive land where everywhere is built.

(2) Much cheaper cost of living in loosely regulated housing markets. Rent and mortgage is a hole in the consumer's pocket, and a black hole for the national economy.

(3) Mineral wealth and resources. (About 50% of Australia's exports are mineral and fuel.)

(4) Impetus. How do you pay for getting millions of people together in a city? It's not cheap and often happens on the back of a gold rush or a port or coal mining. Then when you have a city, the inhabitants can move to other occupations before the gold rush (or longshoreman industry or whatever) comes to an end, and you'll still retain the "bond energy" that was originally bought from land in an opportune spot.

(5) Living conditions and psychology. Very difficult to analyze quantitatively (though there is some empirical evidence), but people are happier if they're less cramped and they enjoy more space and liberty. A happy population is a successful population.

As for Russia, the answer there is that nobody wants to live in Siberia because it's mostly barren and the winters are deadly. But the land still is useful and that's why experts see Russia as a potential superpower.

On August 31 2013 00:58 JonnyBNoHo wrote:

Google wasn't giving me much. What's the pricing mechanic when you do that? Do you not have to bid for the minimum allotment?

On August 31 2013 21:32 bkrow wrote:

Agriculture makes up 2.2% of the Australian economy. That is, two point two percent

On August 31 2013 19:17 Rassy wrote:



Well its not that difficult.
A company is not worth what 1000 people are willing to pay for 1% of the shares.
A company is worth what x people are willing to pay for 100% of the shares.
Stock prices often inflate way above the true value (that what people are willing to pay for all the shares) because only a small percentage of the shares is on the market. As soon as all shares would be offerd for an inflated price the price would crash, it can only hold its inflated price because the amount of shares offerd is verry low. (this specially in europe and with small caps)

Buying back shares is a big scam, i can not stress this enough. Why buy back shares when you can also give dividend?
Because when buying back shares, the monney only goes to a select group of shareholders, the group that sold their shares back, and dividend goes to all of the shareholders... this is the ONLY reason.
So..when a company is buying back shares, make sure you are in the group of people that gets the monney, the group of people that is selling their shares.

How can you explain a company selling shares for 2 euro, then buying them back for 10 euro 6 years later, and then 4 years after that selling them for 1.20 lol? The only other explanation possible is that the company has extremely bad management, not able to forsee the future well.
Buying shares for 10 and 4 years later selling them for 1,20 lol ><
You have to see what is going on here (the company beeing played with by the banks to suck it dry and let small shareholders left behind)
This company had a debt of like 25b euro in 2009-2010, yet instead of paying down debts with cash they start a share buyback program worth like 6b euros buying shares for 10 euro each (and higher, if look at the chart, then you can see the share buyback program is exactly at the top lol, i did examine manny share buyback programs and far more often then not they all where initiated at an absolute high for the shares)
Then 4 years later the debt of the company is deemed to high,and the banks say to the company "hey your debt is to high, you cant meet the conditions annymore and you have to sell shares for 1 euro ea"

The scam is the banks buying the shares in 2003 for 2 euro each, then in 2010 forcing the company to buy them back for 10 euro each, and then forcing the company in 2013 to sell them again for 1.10 ea.
The price of 2010 was the inflated price btw, manny small investors bought for that price thinking "the price of the stockmarket is always the right price, so i cant go wrong" But this mistake is unforgivable for the higher management of the company who aproove of the buyback program,and who do have a verry clear insight in the true value of the company.

Now apple: 100b+ in cash to hand out to the shareholders, i believe they are going to pay out dividends of like 25b and use 75b to finanance a share buyback program... They are even going to lend monney to finance a part of the share buyback program while they never had debts before.
Whats going on here?
Imo its big investors wanting to go out of apple because they can all see that in the next 10 years apple will get completely crushed by the competition from korea and china.(because apple lost their innovative advantage and now that marktet will become dominated by cheap producers because noone can compete with an innovative product)
After having had a great ride for 10 years with the stock going from 20$ to a high of 700$ (and 470$ now) they want to get out. They rightly fear that if they would start selling their holdings onto the market the price would crash so they go the the company and say
"hey we have so manny shares so you have to do what we want, and we see you have tons of cash" "we want you to give the cash back to the shareholders"
And apple goes
"ok, i can start pay out dividends, how does that suit you guys?" and the big investors go "meh we dont realy like that because then the monney will go to every idiot who bought apple shares lately, and we think they dont deserve anny of that monney" "lets do this different, we want to get out and sell our shares, so you start a buyback program and buy our shares" and apple goes "hmm its not realy ethical but i guess i will need you guys in the future, so lets do this"

And no, i wish i was a conspicary idiot who only imagine this, but unfortunatly this is realy how the game is beeing played.
Annyway:I realise this is all slightly off topic btw, so will stick to the subject in next posts.

On August 31 2013 22:45 Crushinator wrote:
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Pricing is done by the underwriter(s), they set a price based on their evaluation of the company. There are auctions where the bids determine the final price, but those are not what I'm tlaking about, and are only a small minority of IPOs.