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

To: Seeker of Truth who wrote (44426)	7/16/2001 12:00:11 AM
From: Earlie	Read Replies (2) \| Respond to of 54805

Malcolm: History doesn't repeat, but it sure does rhyme and no matter how manic a market may become, in the end, earnings drive stock prices. As I see it, an investor's job is to try to determine future earnings,..... by whatever means he has at his disposal. In my case, I prefer to get out into the field and find out first hand how a company's sales are going as well as how well the company's products are proceeding through the distribution pipe line (inventories) and how well its products stack up against the opposition. What is (and has been for some time) apparent, is that total market saturation has arrived for many tech products, hence their products are not moving, their inventories are enormous (and NOT falling), price wars rage, and margins have been crushed. Will the earnings of the involved companies rise or fall under these circumstances? I also try to maintain a handle on the global picture (not doing this in the past having been incredibly costly) and I also think an investor needs to examine a company's reports..... particularly given the emergence of "pro-forma" reporting, (which ought to more properly be called baloney). There are many ways to skin the cat, but when one gathers a bunch of info that all adds up to "much reduced future earnings", the probability is high that the stocks under examination will experience price declines. Where that is the case, it makes sense to me to short those stocks (the risk/reward ratio being most decidedly on my side). By the way, contrary to your comments, on the whole, earnings do not turn on a dime and when they do, it is far more usual for this to occur to the downside than to the upside. I have no idea as to how deeply you delve into either the U.S. economy or the global scene, but if you do, you know that we are witnessing a remarkably abrupt decline, almost across the board. As an example, trucking, which is a superb indicator of the direction of the U.S. economy, is down dramatically and continues to fall. Globally, trade is dropping swiftly and shipping rates are deteriorating. Corporate capital expenditures have gone off a cliff, bankruptcies are once more moving towards historic levels, international trade revenues are falling, more than 3.0 million U.S. citizens are now on the unemployed lists, and announced lay-offs in the U.S. this year are approaching 1.0 million. This is not the stuff of which a "rebound" is made and the list of negatives is growing. If you are unaware of the Fed's manic printing, then you are missing an important item. It is quite literally beyond anything we have seen for decades. Repos by the dozens now and almost daily coupon passes have moved the U.S. money supply into a parabolic curve. The Fed is in panic mode and this is visible in the weekly money supply numbers. Best, Earlie