Financial Shenanigans: Stocks Looking for a Fall Message Board

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Microcap & Penny Stocks : Financial Shenanigans: Stocks Looking for a Fall

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To: ftth who wrote (60)	6/2/1998 4:33:00 PM
From: BelowTheCrowd	Read Replies (1) of 108

> The study removed the financial companies that didn't have current assets or plant assets that contributed meaningfully to returns < The problem with this is the assumption that all non-financial companies necessarily do have current and plant assets that matter. In fact, much of the value being created these days is dependent on itellectual property which is often not capitalized when it's developed. In it's ultimate form, this process leads to companies which have almost no assets but still have tremendous quality of earnings which result from non-tangible copyrights, patents, etc. This is most common in software, but even in computer hardware it is increasingly common, as we move to outsourced manufacturing, low inventories, and rapid turns. So I'm not concerned that "non tangible" assets are up as a percentage of total assets at many companies. This is to be expected given our shift to an information economy. However, it is worth questioning whether 24% is the "right" number. I have no evidence either way on this. mg

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