>> 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.

And here I was thinking that the share price is just an arbitrary 
plucked out of thin air and fluctuating at random...

>> 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.

So, like, if you own several million dollars worth of assets that you 
might potentially be able to sell, people aren't worried if you make a 
few thousand in losses? (Or rather, not *as* worried as if your assets 
were, say, £200...)

>> 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).

It makes it look like all you have to do is *convince* people that if 
they invest enough money, "one day" you will start making a huge profit. 
Of course, talking people into things is significantly easier than, say, 
ACTUALLY MAKING A PROFIT.

-- 
http://blog.orphi.me.uk/
http://www.zazzle.com/MathematicalOrchid*

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