Pancho, a recent Forbes article about accounting
tricks to enhance earnings and increase a company's
stock price was posted by Stephen D. French to SI.
Message 3816170
I suppose, in your case, it is preaching to the
choir. Still, you and others may find it interesting.
If BFIT, or any other company for that matter, is
pulling such tricks, the question for investors
is what to do when. It appears, if you believe
the article, the very accounting trickery you decry
just about guarantees a rising stock price until
a rising house of cards is no longer sustainable.
The question is when does such a structure come down?
If one forgets any moral indignity about chicanery,
it seems to me an investor would want to be long
such a stock until the point it appears in danger
of breaking. Then, one would want to be short.
The only guides as to the turning point which
I can now conceive would be 1) an extreme,
unsustainable upward acceleration in price,
such as that produced by a short squeeze,
2) a general collapse in the overall market
which would motivate those propping up a stock
to move their money into safer vehicles, or 3)
a large secondary offering suggesting that
those on the inside are about to distribute
inflated stock and run.
Can you or anyone else expand (or decrease)
the above list?
Bob |
