Subject: IC940808: Discussion - Jianping Zheng

From: "Gray Zhu, 800-289-2498, 212-279-6700" <[email-masked]>
Date: Sun, 7 Aug 94 23:23:15 CDT

==================    IC940608: Investment Club  ======================

1. Discussion .......................................... Jianping Zheng
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   (be sure to read the Disclaimer in the end if you have not read)

1. Discussion .......................................... Jianping Zheng

>From: [email-masked]
>Subject: Discussion

A few comments after reading recent ICnet.

"Underwriter"
~~~~~~~~~~~~~

I'd like to extend Gray's explanation a bit.

An underwriter is the person who purchases a whole lot of shares from the 
company who issues the shares, and then sale these shares to the public or
institutions. In this way, the company can get the necessary money quickly
and start business.

The underwriter is paid commision for doing that, usually. He will also 
undertake the risk that sometimes the public may not be interested enough
for the new issue and he ends up with loads of unsold paper stock or have 
to sale them at a lower price, therefore suffer a loss.

For safety  the underwriters usually try to persuade the companies to sale
them shares at a reasonable price, and guarantee a certain amount of 
over-application from the public. Even though, the competition between them
is great, the company would like to be sold at as high a price as possible,
and they may misjudge the circumstance, and eventually there will be some
winners and some losers all the time.

I wonder whether "over-allotment" is the so-called "over-subscription" in
UK. In this case, normally the application will be scaled down, unless
it has already being stated that the company can issue more shares. This 
is necessary to protect those who applied. If the share is heavily 
oversbuscibed many investors will have to buy them from the market and
the price jumps.

The hunting of winners is therefore a very interesting part in IPOs.

Trader and Investor
~~~~~~~~~~~~~~~~~~~

It is interesting to hear the discussion about trader and investor styles.

Ultimately, there is only one way to classify people playing in the Stock 
Exchanges, those of winners and those of losers.

If you know that shares of a good company is going down in the next few
days, will you still by it NOW because you are the so called (long-term)
INVESTOR? 

Those of "traders" have developed some ways to spot the period that markets 
is at greater risks. There is certainly no reason not to fully exploit them.

There were enough great companies went numb or bankrupt over centuries. 
Long term investors will may have a good chance to hit these lucks. How
about those new growing companies, I can assure you that the directors 
and employees get far better payment than you shareholders. The market
is a risk place, it would be silly to stay there in every storm because
you are an investor.

Being flexible might be the first criterion to success.

Markets
~~~~~~~

The markets might have a very narrow window to trade something. You may
spot Hong Knong market and UK market, which were always under the mercy
of US investors, have turned quite smartly recently.

Which does mean that if you are doing you homework incessantly and properly, 
you might snap a few of chance and take some decent  profits. (Well, judge
youself, I knows UK better).

Still, mind the uncertainties ahead. The collapse of bond will continue 
to be a fuss.

Good luck.

Jianping from Oxford

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