Forbes just released this interview with STX CEO, Stpehen Luczo. Here is his response to the question why Street doesn't have more respect for the drive companies:
"Because the drive stocks are not being priced on fundamentals, they being priced by large investment banks for volume, and volume requires volatility"
"So thaat's why all the big firms are in a different camp than the smaller research firms on their perspective of the drive industry. Is it because these are the smart guys, and those aren't? That doesn't make any sense. It is because the banks are MOTIVATED by volatility and the boutique firms aren't. And therefore the research reflects that. So you can create and environment that always creates doubt, with billion dollar market cap swings in a week. It's insane. Why does it work? Beacuse you have traders who loe to make that work"
FYI, for years I have emphasized this point. The game with the I banks is about maximum contrived volatility to drive trading voume and profits. Thank you, Mr Luczo, that explains it all very well indeed!
Here's some more:
"So do I think that changes? I don't know that I see that changing for our equity markets in general, which is a terrible thing for the efficient allocation of capital. Does it change at the margin for the drive industry, if there is less volatility? Sure, I think it does. It takes time though. It's going to take time"
I just posted Luczo' comments on the INTC and AMAT boards, two tech stocks that are also highly manipulated by trading cartels.
Within a few seconds, over twenty one star recommendations simultaneously appeared on my post on both boards.
Somebody doesn't like to be exposed as a crook.
Everybody should think very carfully about this:
"If you were a really big, smart technology company that saw all the trends in cloud and mobility; all that says is storage, storage, storage – you’d probably see a reason why owning these critical technologies is important. ..... I think if someone were thinking about it from a pure technology perspective, they’d be all over it."
Now, who out there in the world has been looking at critical technologies and making decisions to "be all over it," even to the point of monopolizing it?
Churning-Churning occurs when a broker engages in excessive buying and selling of securities in a customer’s account chiefly to generate commissions that benefit the broker. For churning to occur, the broker must exercise control over the investment decisions in the customer’s account, such as through a formal written discretionary agreement. Frequent in-and-out purchases and sales of securities that don’t appear necessary to fulfill the customer’s investment goals may be evidence of churning.
ok i agree. I banks have two parameters to play with: volume and volatility.
And even if their large mutual funds dont want volatility, the I Banks rule!
That's why it (ie I Banking) is the most lucrative and hideous job around. Time to pay bozos.
vikes da man,
I saw that too and was wondering. Some other reason than basic valuation must explain it. But is it volatility?
At the end of the day, who are the biggest clients of the I banks. I reckon it's large mutual funds, who get ipo's pay for research, generate millions in brokerage fees.
But do these clients want volatility for their big mutual fund clients? Does that make sense? I would think large mutual funds eschew volatility...
No the banks want voltaility to drive trading volume and profits.
For years the hedge funds with the help of the banks have manipulted the drive stocks up and down. It's a vertible money machine if you can control the stock price. The hedge funds short the drive stocks this time of year and run them back up in the Fall. They are trying to work the drive stocks down now, which explains why 9 bank Analysts are neutral and the Serfayi scam last week.