US IT jobs going overseas creating 'IT Rust Belt'.

[Brian Kelsay]

I don't see why supply and demand and the transfer of money from one hand to
another is so hard to understand for most people.  This is not any different
from gambling.   I ante up a buck ($1) to the pot to play, players raise the
bet, people fold and leave with nothing and others bluff and hold out til
the end.  Somebody walks away with everyone's cash.  The cash didn't APPEAR
on the table, the players put it there as a price for playing the game.   If
their cards don't have enough value (real or perceived) compared to the
other players' cards then some players fold or forfeit their small amount
before it becomes a large amount they could possibly lose.   This is the
price of the chance of winning big.
Brian

----- Original Message -----
From: "Dave Hull"
Sent: Monday, May 12, 2003 10:52 PM
Subject: OT: Re: US IT jobs going overseas creating 'IT Rust Belt'.

> On Mon, 12 May 2003, Charles Steinkuehler wrote:
>
> > It really did "vaporize", but you first have to realize that it also
> > materialzied overnight, too.
>
> When a company goes public with it's IPO, real money is paid for the
stock. It
> doesn't really materialize out of thin air, someone is paying for the
stock
> with money that came from somewhere else, savings account, paycheck,
credit
> card, etc.
>
> > - Seatle Joe forms WigiCorp, a trend-of-the-minute high-tech startup.
> > [snip]
>
> > NOTE:  The share price reflects the price a buyer and seller agree on
> > for a specific sale.  While in the normal world this should reflect the
> > true market value of a company, in thinly traded stocks, or in
> > situations where investors are acting irrationally (ie everyone's trying
> > to jump on board the hotest/latest trend), prices can get disconnected
> > from reality.
>
> Actually, over the history of the stock market, most shares trade at a
> multiple of the actual book value of a company. During the period of
> "irrational exuberrance" that multiple may have reached a historic high
point.
>
> > If one moron...er investor is willing to pay $1000 a  share for one
share of
> > WigiCorp stock (instead of the "going" rate of $100), the *ENTIRE*
WigiCorp
> > company (and all it's existing shareholders) get a 10X "virtual" gain.
>
> Sure, it's a "virtual" gain. I agree, you don't gain (nor lose) anything
until
> you actually sell your holdings.
>
> > [snip]
> > - When you return, WigiCorp stock has crashed.  It is now worth only
> > $0.10, and is about to be delisted.
>
> It has crashed because shareholders sold their shares to "take profits" on
> their investment. The result is that they have flooded the market with
shares
> which are no longer being snatched up by other investors, supply is great
> and demand is low.
>
> The shareholders who sold their positions and took profits, have
effectively
> taken your money for themselves. A transfer of wealth has occured, not a
> vaporizing of money.
>
> > So...it's actually pretty easy to wave the "magic wealth creation wand",
> > and even easier to see the whole mess disappear into the thin air from
> > whence it came.
>
> I still don't follow this. If a company goes IPO, their shares are
purchased
> by investors. If the stock goes up and up as more investors chase fewer
> shares and this bubble bursts because some of the early investors start
> selling to take profits, those investors are effectively taking the money
of
> those who paid more for the stock than they did, they have made money on
the
> investment while those who paid more than them have now lost money (or
will
> when and if they sell at a lower price than they purchased the stock at).
>
> No money has disappeared, it has simply transferred into the hands of
those
> who bought at the low price and sold at a higher one.
>
> --
> Dave Hull
> http://insipid.com