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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: BDR who wrote (31802)	9/20/2000 11:42:33 PM
From: BDR	Read Replies (1) \| Respond to of 54805

"Intangible Assets" and "Knowledge Capital" showing up in another discussion of accounting and company valuation: redherring.com (why is RedHerring's site so slow?) You cannot value a company simply by looking at the quarterly earnings. There are hidden values in companies that don't turn up in the financial profile. These are often referred to as "intangible assets," and Mr. Desautels believes they explain the seemingly high valuations of many stocks. For example, in the Old World, R & D expenditures are accounted for as an expense, whereas in the New World, you should account for R & D as earnings that are reinvested in the company, rather than simply lost expenses. Another huge, intangible value lost in conventional models is the value of management expertise. If you think about the most well-managed companies in technology, they have been constantly underestimated over the years because traditional accounting methods have discounted the hidden value of their superior management.