doublenickel

The Merrill Lynch Diet: Starving Shareholders

I'm a newby to this whole game, but it seems to me that what Merrill and others are doing in selling newly-issued stock (I assume that's what they're selling) is a precise analogy to the government's "creating liquidity". What Merrill is doing, looks to me to be spending some of their market cap--about 8 billion of the 24 (oops, 23.5...oops, 23...)billion. A little math tells me that after this is over, the share price will be at about 16, assuming nothing else changes, which it will, since existing holders probably will be motivated to do something about their situation. I know this is hopelessly elementary to most of those out there, but it was an "aha" moment for me, and I'm glad of the opportunity to think about it at the keyboard. I welcome any enlightening comments!