<<Accounting questions typical after bubble bursts
One research and investment firm said accounting jitters have always surfaced when investment bubbles were pricked.
"Questioning whether aggressive accounting had led to inflated earnings and over-priced stocks occurred following the bursting of all stock market bubbles we can remember. That's because stock bubbles encourage aggressive accounting, which isn't paid attention to when stock prices are rising and business is booming but gets focused on when stock prices are falling and businesses are being stress-tested," Bridgewater wrote in its daily research note.
The firm pointed out that Enron's problems -- as those of aggressive public companies -- are more symptomatic of post-bubble periods than they are unique.
"The attention being paid to 'quality of earnings' is more likely to increase than fade away and the surprises are more likely to be bearish than bullish," Bridgewater concluded. Still, the firm admonishes investors to not adopt a bearish stance on stocks because of this dynamic because it's likely to exert only a marginal influence, although it will contribute to a slower-than-usual earnings recovery.
Steve Young, managing director of asset allocation and senior market strategist at Banc of America Capital Management, said only time and improvements in accounting standards will help investors regain lost confidence.
"In the interim, investors will pay more for earnings clarity and less for the complex structure of companies with write-offs, spin-offs or off-balance sheet partnerships," Young maintained.
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from cbs.marketwatch.com
Also, CSCO reports Wed, they have the power to move the market, or not. It appears to me that the selling is overdone, and CSCO report has the power to move the market into a bounce.
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