> How do you determine what some company is "worth"?

Just like anything else, whatever people are willing to pay for it. 
Multiply the share price by the number of shares.

> So it's a question of making people *believe* that you will make money
> some day?

Exactly, and having a good track record of good profit, good management 
and a lot of assets (like factories) helps to convince them you're a 
good investment.  If a company makes an announcement of bad news, the 
share price will usually drop, as people won't judge it to be worth as 
much any more.

> Suddenly the dot-com bubble makes *so* much more sense...

Yeh, if you have no physical assets it's very easy for your "worth" to 
go to zero overnight (eg if you only have one software product, and then 
Microsoft decides to buy one of your competitors and release their 
software for free, you're stuffed).

Post a reply to this message