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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Madharry who wrote (13768)	1/24/2002 10:00:28 PM
From: Bob Rudd	Respond to of 78998

Madharry: I definitely agree that there's currently minimal disclosure and I'd reather get beaten with a hose that scour bond indetures looking for them...The purpose of my comment was to raise awareness and sensitivity to the potential for cascade-like death spiral situations and point to what some of these traps might look like. If a company has minimal net debt [debt-cash] or better yet plenty of cash and doesn't have a cash sucking sink hole potential then there's little risk. But if there's a big chunk of debt and operating leverage, then thinking about the possibility of it turning into a black hole might help avoid same. Might also help distinquish between oversold value plays where regression to the mean is likely and spiral into oblivion situations. Also, while disclosure of these situations as been minimal, the ratings agencies are much more sensitised and there will be more revelations of such potential down the road. It probably won't be fun to own something the day a report comes out about a potential credit cliff situation.