One thing bothers me about the tone of some of the recent posts on SI. It's the conspiracy theory frame of mind.
Somebody says, according to my analysis this company should be falling on it's face and the stock should fall. But it keeps going up. Instead of saying that maybe there was something wrong with their analysis, they start inventing conspiracy theories about how the companies really are failing, but they are cooking the books.
Maybe I am naive, so I'll ask you to set me straight. Isn't it true that large, publicly traded corporations have reputable CPAs and outside accounting firms (Price Waterhouse, A. Anderson, etc.) that take their real numbers, run them and produce the quarterly results?
I just don't understand comments like:
-- "You have to believe in Santa Claus to think there wasn't some fudging in that number. Big time!"
-- "Dead meat, but they may be able to sharp pencil the accounting on the next quarter."
-- "I don't know when they can no longer fake the facts."
Do you actually believe that these companies and their accounting firms are in a conspiracy to fudge numbers? Big time?
Isn't it true there are standard accounting practices? Isn't it likely the earnings and expenses are accurate for the vast majority of companies?
Along with conspiracy theories, there is the idea that the Wall Street analysts are only 28 years old and have no idea what they are doing:
-- "There is a limit in how long they can continue to run up a huge debt load to make it look like they have earnings growth."
Apparently what's going on is obvious to you. But all the Wall Street brokerage houses and mutual funds are employing such immature people it's easy to fool them -- just make it "look like they have earnings growth" and they believe it.
So not only are there conspiracies all over, but also all the Wall Street brokerage houses only employ 28 year olds who don't know what they are doing. If someone's opinion runs contrary to these firms, well, it's easy to see why.
And it goes without saying that almost all investors are wrong too, dupes in the middle of a speculative bubble and they don't even realize it.
The accountants are cheating. The analysts are incompetent. In fact, everybody's crazy ... we're the only ones who are sane!
(And don't forget, the Fed is secretly manipulating the markets in the wee hours of the morning. That's why the S&P is so high! For details, see the Mohan thread.) |
