Companies issue record amounts of stock - time to get out of the market

[Canadian]

Here is an interesting articles for all the bulls , and a short quote from it:

In fact, firms have recently issued far more shares of their stock (either through initial public offerings or secondary offerings) than they did even in the go-go years of the late 1990s and at the top of the Internet bubble in early 2000.

http://finance.yahoo.com/retirement/...&asset=&ccode=

[Tightwod]

Why is it a bad thing? The article does not go into facts about whether the shares are being issued from treasury or if they are even common shares. I have seen a huge number of companies issueing shares recently. Why are they doing it? To raise capital. Why would companies raise capital? Maybe because they see great opportunity to acquire other companies at rock bottom prices. Maybe they need the capital to refinance some debt that is too high an interest rate for more fqavourable terms. These are good things for the companies that are raising capital no??

[Canadian]

Originally Posted by Tightwod

Why is it a bad thing? The article does not go into facts about whether the shares are being issued from treasury or if they are even common shares. I have seen a huge number of companies issueing shares recently. Why are they doing it? To raise capital. Why would companies raise capital? Maybe because they see great opportunity to acquire other companies at rock bottom prices. Maybe they need the capital to refinance some debt that is too high an interest rate for more fqavourable terms. These are good things for the companies that are raising capital no??

It's logical for the companies to issue new shares when the price of their stock is high not low. This way there's less dillution for existing shareholders and at the same time they are raising more capital. This is a vote from the companies issuing shares that they think the market is overbought.

[bullish]

Originally Posted by Tightwod

Why is it a bad thing? The article does not go into facts about whether the shares are being issued from treasury or if they are even common shares. I have seen a huge number of companies issueing shares recently. Why are they doing it? To raise capital. Why would companies raise capital? Maybe because they see great opportunity to acquire other companies at rock bottom prices. Maybe they need the capital to refinance some debt that is too high an interest rate for more fqavourable terms. These are good things for the companies that are raising capital no??

Exactly! There are lots of bargains in many markets right now, and I don't think this will last forever. If you don't buy now you might miss the next strong leg up.

[Steven]

Originally Posted by bullish

Exactly! There are lots of bargains in many markets right now, and I don't think this will last forever. If you don't buy now you might miss the next strong leg up.

I'd rather miss the next leg up, than risking my capital at this point.

[Canadian]

Originally Posted by Steven

I'd rather miss the next leg up, than risking my capital at this point.

I don't think you are missing anything at this point, unless we are talking shorting the market .

[trent]

I also think that there will be another general stock market crash very soon. The fundamentals do not support higher stock prices, as earnings are dismal.

[Tightwod]

Originally Posted by Canadian

It's logical for the companies to issue new shares when the price of their stock is high not low. This way there's less dillution for existing shareholders and at the same time they are raising more capital. This is a vote from the companies issuing shares that they think the market is overbought.

Disagree...

[Canadian]

Originally Posted by Tightwod

Disagree...

Fair enough . Tell me then, where do you see Dow and S&P by the end of the year?

[Tightwod]

I see both higher than today. Modestly. As soon as the earnings start to show signs of recovery people will jump on the wagon again. Markets are Manic depressive, they are currentlty oversold, modestly. They were most depressed in March obviously.