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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era
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To: Daniel Chisholm who wrote (1311)2/19/1999 1:44:00 PM
From: Freedom Fighter  Read Replies (3) of 1722
 
Daniel,

>>So one could really question how much of the depreciation should really be
charged to earnings to begin with. Inflation or not some infrastructure will not be
replaced. This is a rare business. I certainly don't have the answer here. But I
believe it is an issue and difference as it relates to the discussion.<<

> How about simply considering it to be equivalent to (say) a mine, where one is
consuming an asset in order to generate income (and this is not an irresponsible practice,
rather it is the nature of the business). <

I'll have to think about this issue and your suggestion a bit. If you know of any research where I can begin I'd appreciate it. I never really looked at the cable business. I just remember reading about the depreciation issue in an article by some other value investor. I don't remember who it was, but it WAS a household name. Maybe Gabelli??? I could never understand the values based on earnings so I just skipped by them. Most of them don't have any earnings. Yet some very smart people pay some very big prices for the assets. There must be something there besides promise, and I suspect at least some of it is related to depreciation.

Wayne
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