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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 77.72

-0.6%

10:52 AM EST

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To: RetiredNow who wrote (61390)	9/22/2002 2:37:33 PM
From: Tom D	Read Replies (1) of 77400

MM, the article does not address the problem of pension revenues. <<Pension assets of S&P 500 companies on average declined 6.9% last year, yet they used an average growth rate of 9.2% to calculate pension revenue in financial statements>> When the actual pension earnings (make that losses) get reconciled with the rosy projections, the differential becomes a loss against ordinary income. usatoday.com When will that happen? << ...S&P this month will introduce a "core earnings" measure that will strip away such things as pension revenue to better gauge corporate earnings.>> When many corporations are reporting losses instead of expected earnings because of pension losses, stock prices will again fall dramatically. More layoffs, less economic growth, more losses in pension funds, worse earnings. It leads into a death spiral for the markets. MM, I think you have posted in the recent past that you are hoping for returns of 5 to 7% in the market. So how do you figure the pension funds will make 9.2%? I don't know how likely this is, but the risk of it seems high enough to keep me in short-term bonds. If anybody can explain to me why this interpretation is wrong, I would be very appreciative. Thanks, Tom P.S. When the markets were going up in the bubble years, the companies took the overperformance of their pension funds as income. I don't see why it will be different on the way down.

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