will sellers get tired today?

wow ugly, ugly this week. the way i see it is that conservative accounting and cautious investors mean lower prices for stocks. dollar slide has abated somewhat so somthun to keep an eye on. treasuries rallying why did i sell? thats ok the money has been put in a good place ha ha. yahoo came out with earnings yesterday. saw an interestin post on it:


http://messages.yahoo.com/bbs?.mm=FN...319&mid=355308


hey wildbill and others what you think about expensing options used as compensation? tech ceo was against it because he says company takes a double hit one for the dilution of earnings through more shares and one to earnings based on expenses. seems like hes got a point to me but overwhelming sentiment seems to be that expensing is the right thing to do.

hey options are compensation given by companies to employeess....i think that salary given to employees should not be an expense because then that money is not available for capital expenditures...a double whammy?????...she's going down boys...protect yourselves...gl

The truth is that not expensing options makes no sense. It is a cost that will be incurred at some point and you have to disclose that anyways. To say it goes into footnotes, but not the numbers is patently ridiculous. The fact is the numbers are a joke because its all about spin. Earnings numbers are silly and make no big difference if you want to really value a firm. That is the truth no one seems to want to admit these days. That is why I went on as I did about WCOM and others. Earnings lies are just catching the execs in window dressing that didn't work out. The market is so obsessed with what happened in the past that I just almost pull my hair out. Someone needs to tell me what it really matters, outside of integrity issues, if a company made 10 cents or 20 cents two years ago! Its in the past and it matters little to what the future of the company will bring. If you buy WCOM stock today, you are most certainly not buying inflated earnings of two years ago! Simple truth, amazing to me how no one seems to understand this. People just need to remember that valuation is all about the future cash flow potential of a company, little else matters including their window dressing earnings.

"The truth is that not expensing options makes no sense. It is a cost that will be incurred at some point and you have to disclose that anyways. To say it goes into footnotes, but not the numbers is patently ridiculous."


yeah i agree. well stated.


"The fact is the numbers are a joke because its all about spin. Earnings numbers are silly and make no big difference if you want to really value a firm."


interesting.


"That is the truth no one seems to want to admit these days. That is why I went on as I did about WCOM and others. Earnings lies are just catching the execs in window dressing that didn't work out. The market is so obsessed with what happened in the past that I just almost pull my hair out."


interesting point and i agree for the most part but do take an exception which ill discuss subsequently. the fact the wcom was cooking the books shouldnt have been a big surprise nor should it be a big surprise that other companies are doing it. youre right it happened in the past and all you can do now as get a evaluate companies goin forward. the thing i would take debate with you in a friendly way is that estimating growth potential does seem to have something to do with past performance. also the use of debatable accounting practices does put into question what the companies are really doin.


"Someone needs to tell me what it really matters, outside of integrity issues, if a company made 10 cents or 20 cents two years ago! Its in the past and it matters little to what the future of the company will bring. If you buy WCOM stock today, you are most certainly not buying inflated earnings of two years ago!"


most true although I would say the wcom debt have been affected a great deal. often i find the debt issues more interestin than the stock.


"Simple truth, amazing to me how no one seems to understand this. People just need to remember that valuation is all about the future cash flow potential of a company, little else matters including their window dressing earnings."


true but i think the problem many have is getting a good understanding of future cash flow is hard when there is so much window dressin.

Oh that is definitely another issue. Getting in good management is important, but what I marvel at is how people act like so and so stock is worth 50% less today than yesterday because of something I found out about that happened two years ago. If they are saying "we lied about revenues and we are never going to make them" ok that is a hit to valuation. If they say "we swapped capacity two years ago to create revenues, but haven't done it since" that should only very slightly change your fundamental thinking. Sure there will always be questions about earnings, but that is the fault of the narrow minded investor. Every company right now that hasn't done their earnings for the quarter is sitting around deciding what number you should see. Accept that fact. None of them run the numbers and let them fall as they may. They manage the hell out of them, increasing or decreasing reserves, working the bad debt ratios, looking at bonus accruals. This is stuff everyone does and yet the average investor acts like it doesn't happen. Know why it happens? Because idiotic investors sell off a stock to the tune of 15-20% because they missed their number by a penny! That is why I am blaming the investors for a lot of it. If investors looked long-term and understood businesses better, they wouldn't care about earnings releases. If a stock misses by a bunch, fine punish it. That fundamentally could change its future potential. If it misses a .90 estimate by a penny or two, forget about it the model probably didn't change. After all maybe they were more conservative and didn't squeeze the pennies out of their reserves like another company might have. That is where the earnings fallacy hasn't been addressed and every year companies hire bigger and bigger finance/accounting staffs to handle this.