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To: sun-tzu who wrote (131455)	10/27/2001 9:06:20 AM
From: sun-tzu	Respond to of 436258

Fleck...10/26/01 The world according to GAAS -- generally accepted accounting shenanigans. Overnight, the markets were quiet. Asia was not really sizzling on the back of our wild performance. But this morning, Europe got into the act with a nice little bounce. After our slightly weaker opening, we had a mini-ramp job, then a straight-down move. That followed the release of the consumer confidence and home sale numbers, even though they were about in line with expectations. The dip was bought, and then we had a little surge higher in the S&P and the Dow. The Nasdaq was doing the flop-and-chop routine, basically unchanged. Dow Courts Sybil There was a bit of a midday surge that had the Dow up 1% and the Nasdaq up about 1%, but it sort of fizzled, at least it had fizzled with an hour to go. The Rap is being completed one hour early, so I won't be seeing the closing prices. That said, today was definitely a Sybil day. The different indices went their own way at various times, with the Dow the strongest for the better part of the day. I don't think there's too much information to extract from today's trading activity. It will be much more illuminating to see what happens next week as we near the end of the month and discover what sort of market games people have in mind. Birds Of A Feather Do Nothing Together Away from stocks, it was very quiet, with everything plus or minus a small amount. No Helmets Necessary When Being Barraged By The Truth After yesterday's amount of pontificating, I will get off my soapbox today. But first, I want to discuss a must-read New York Times article by Floyd Norris called "Harvey Pitt's Friendlier SEC." (Registration required.) For those of us who would like to see a little more honesty and integrity return to the marketplace, it's somewhat unnerving to see the direction in which Harvey Pitt is taking the SEC. The article points that out and also raises additional concerns. Floyd writes, "He [Harvey Pitt] spoke favorably of 'pro forma' earnings reports, in ways that no doubt heartened accountants who have worked so hard to find ways to make even the worst profit figures look pretty. There was no mention of Mr. Levitt's concerns about improper management of earnings." I think that one statement from the new chairman says it all: "I am very much in favor of a vigorous enforcement program, but I am not in favor of having investors barraged by conflicting statements and restatements." Say A Couple Of Hail Harveys The SEC also made news yesterday regarding its apparent willingness to go easy on a firm if it admits guilt. All of this is a little bit fuzzy right now. For the longest time, I have been saying that Wall Street is entirely too comfortable with the attitude of "We don't care if you lie, in fact we love it, just don't get caught." Now there is the potential either for companies not to be caught, or if they do, suffer no consequence so long as they go through the motions of cooperating. Ladies and gentleman, this is a very disturbing trend. In my opinion, financial statements in America have never been as much at odds with the underlying facts as they are now. In the mania, corporate America took to lying and obfuscating the truth on a pretty regular basis, but no one seemed to care because the stocks were going up. The FASB and the regulatory bodies that were supposed to be in charge of making sure accounting meant something just sat back and passively observed the shenanigans play out. Now it appears as though the SEC, corporate America's chief watchdog, appears to be acquiescing even more. Ablution Just as people were blind to a reasonable ratio of risk and reward during the mania, they failed to demand honesty and integrity from the financial statements churned out by corporate America. But bear markets wash away the excesses of the bull markets that precede them. And, this last bull market is different only in the greater degree of insanity caused by the bubble. As anyone who is awake knows, the purging process is in its early stages. But, I believe that before this bear market is over, the marketplace will force corporate America to turn out financial statements that actually mean something.