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Sunday, March 12, 2006
High-Tech Strategist - March 2006
Each month, I will highlight 3 key points from the High Tech Strategist. If you do not subscribe to this newsletter, I highly recommend that you do. Email me if you want subscription information.

2 Key things to highlight from this month:

1) The Money Supply
Fred makes the case that the inflated money supply is the primary cause of real estate prices, commodity prices, etc. He provides data indicating that over the past 10 years, M3 has risen from $4T to $10T (8 % a year compounded). The net: we are in an inflated world and those that can protect against this can do ok. Those that cannot....

2) Repurchases, Options, etc.
Most tech companies have grown earnings over the last 10 years. Those that have not seen corresponding stock appreciation suffer from an ever-contracting multiple. Basically, many have been achieving EPS growth through excessive share repurchases. Further, with large stock option grants, those repurchases have had a negative impact on SHE (book value). Book values are falling because of stock option dilution. The buybacks, to offset share issuance, have degraded balance sheets. Everywhere.
posted by Rob @ 10:02 PM  
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