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Strategies & Market Trends : Paint The Table -- Ignore unavailable to you. Want to Upgrade?

To: Jorj X Mckie who wrote (6900)	12/20/2001 11:49:45 AM
From: John Pitera	Read Replies (1) \| Respond to of 23786

Great post. You would think that Argentina is priced in unless there are banks, financial institutions or big hedge funds either here or overseas that have too much exposure to their debt or to say Brazil or other emerging markets and we see emerging markets debt spreads expand, and or currency turmoil in emerging markets. Additionally we saw how european banks had the most unsecured exposure to ENE, and some Japanese funds were holders of ENE paper. It roiled Japan a little. I mention this because do you get to the last straw on the camels back at some point in which it's the cumulative series of blows that causes a bigger problem. Companies, banks etc have been seeing losses on investments and assets for a couple of years now. look at how the whole merchant energy sector is really getting it's market cap marked down. ENE, CPN, EPG, MIR, DYN and others. Luckily there should be signs of real stresses on the system that should show up in the international markets. Let's hope so anyway. Macro bears can argue that the furious FED easings of rates and massive Money Supply expansion IS a sign of real stresses in the system. I've not even really gotten into Japan's perilous state of affairs.

To: Jorj X Mckie who wrote (6900)	12/20/2001 12:20:05 PM
From: John Pitera	Read Replies (1) \| Respond to of 23786

You're right the charts of FLEX and CLS were not good. I think it shows how market sentiment is continuing to get more cautious compared to 6,12 and 18 months ago. ENE fell apart due to balance sheet and valuation problems and low and behold most of the other merchant energy companies have taken really big hits. They also have some debt, balance sheet and accounting issues. SLR has balance sheet and debt problems and so now the market is realizing that maybe the other contract manufactures have these same issues. (flex, jbl, cls etc) This is a real sea change in which the public and money managers are acquiring an increasingly skeptical perspective in the way stock investments are viewed. There was talk on cnbc yesterday of a video that FASB has released fasb.org Ben Stein interviews Warren Buffett, Abbey J Cohen, Floyd Norris of the NY Times on what quality earnings are and why they matter. Earnings have been vastly inflated by many companies the past several years due to the use of pro forma earnings and other accounting techniques. With pro forma earnings, expenses and costs that are incurred by the company are called "extraordinary" and one time. Thus they do not count when calculating earnings per share. Some of these one time charges are increasingly looking like ongoing costs of businesses. Today many companies engage in ongoing financial engineering, buying and selling assets, businesses etc. Also if a company overpays for several companies which both ENE and CSCO did, and many others. And then writes off billions of dollars, the company can say those bad investments don't matter, but they do. This is a game that many, many companies have been playing during the 1990's with increasing zeal. It seems that this is a trend where there is more and more recognition and concern about what companies are really worth. In the bigger picture over the next 2 or 3 years, we could see this trend increase and there will be more people looking at their diminished portfolios for companies that are still overvalued. Obviously this theory is not going to provide trading direction for the next few weeks.

To: Jorj X Mckie who wrote (6900)	12/20/2001 12:46:04 PM
From: Peach	Read Replies (1) \| Respond to of 23786

Although I can't come close to seeing the big picture like you and John and Auggie and Mrs. Peel can, I will tell you how this market has changed my thinking. I don't trust this market or my judgment of it. I am being more careful with my money, for example, spending less on Christmas presents. I am not charging my presents, if I can't write a check I don't buy it. Last week I sold a couple of loser stocks in my IRA (at about $1000 loss) and bought a little BRKb. How conservative can I get? ;-)