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Strategies & Market Trends : Waiting for the big Kahuna

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To: Arik T.G. who wrote (18491)	5/15/1998 11:57:00 AM
From: Mike M2	Read Replies (2) of 94695

Arik, with respect to the "strength" of the economy and corporate earnings i wanted to make a few points. The quality of earnings is suspect for several reasons. 1. the dramatic decline in interest rates has reduced interest expense 2. option accounting gimmickery see Forbes 5/18 cover story for details 3. Share buybacks makes eps grow faster than earnings 4. massive write offs of "nonrecurring" restructurings keep recurring-g- -they bury future expenses in the write off so subsequent reports are stronger. When i make these points some people fail to understand that these factors are not sustainable going forward. 5. productivity is dismal -much lower than the 20's or Japan in the 80's in addition it is overstated to the extent the workweek in hours govt uses 35/hr week productivity is overstated. I'll fill in the stats and references later in the weekend . I'll also dispel some more of the new era lies and propaganda. Mike

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