Stock Attack II - A Complete Analysis Message Board

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Strategies & Market Trends : Stock Attack II - A Complete Analysis

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To: StockOperator who wrote (38429)	7/25/2002 2:22:45 PM
From: Jack T. Pearson	Read Replies (2) of 52237

NASDAQ performance so far today has to shake the confidence of everyone who thought yesterday was a market bottom. Another one-day wonder won't help investor confidence. Tyco bankruptcy rumor which Tyco denies. This is symptomatic of companies that generated a heavy debt load to make acquisitions and are now having a problem servicing that debt. Liquidity crunch is making problem worse as lenders are tightening their standards and only want to advance/extend credit to companies with low debt and reliable positive cash flow. Banks are calling in loans from companies when falling stock prices hit trigger prices that are documented in the loans. Some of those trigger prices are secret and have never been revealed to stockholders, so companies with poor cash flow can self-destruct with no warning (of course the insiders know and can limit damage to themselves). The more the public learns about how the odds have been stacked by the insiders in the insiders' favor, the less likely the public will want their money at risk. That is a key factor that the market is slowly discounting.

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