Monday, May 14, 2007
How Life Imitates Chess
Blend creativity with calculation
Experts talk endlessly about financials and price-earnings, and yet stock prices may often fly in the face of their analyses. Why so? Because "stock markets aren't about the future of a company nearly as much as people would like to believe," explains Garry Kasparov in `How Life Imitates Chess' (www.oxfordbookstore.com).
Writing in summer 2006, he cites Google's share price at `an astronomical $387' (down from over $450 at the start of the year), and market capitalisation at over $120 billion. "So, according to the markets, Google is worth far more than the total value of every company in Chile ($65 billion)." A dubious assertion, notes Kasparov. For, "Chilean companies combined to create a GDP (gross domestic product) of $169 billion in 2004, while in 2005 Google had earnings of a few billion dollars."