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Non-Tech : The ENRON Scandal -- Ignore unavailable to you. Want to Upgrade?

To: Patricia Trinchero who wrote (2073)	2/1/2002 4:36:19 AM
From: Raymond Duray	Read Replies (1) \| Respond to of 5185

Hi Patricia, The whole of telecom remains weak. So, I'd be very leery there. And in the general realm of tech, I think that a key term to look for in a company's quarterly reporting is "pro forma". If you see that term bandied about, I'd run for the exits. It simply means the company is making up fantasy numbers and fantasy earnings. Most importantly, do read the reports on cash flow. This is the most significant signal as to whether a business has a chance of being a going concern. There's still a lot of walking dead out there. And if you, like me, think that Artful Andersen is simply a bunch of crooks, here's a black list: Message 16992304 It's a start, but then what can I say, I've been in cash for over a year. I've had a bad feeling about the stock market for a while. I don't even begin to think I see a reasonable candidate to go long on at this time, short of playing the short term TA related daytrading schemes that just don't interest me. Stocks are in a range and this is no place for a LTBH type investor, IMVHO. JM2C, Ray

To: Patricia Trinchero who wrote (2073)	2/5/2002 3:54:14 PM
From: Raymond Duray	Read Replies (1) \| Respond to of 5185

MORE CANDIDATES Hi Patricia, In response to you inquiry: I did own Global Crossing. Enough is enough!!! Who's next? thestreet.com Good Reason to Be Afraid of Fear Itself By James J. Cramer 02/05/2002 01:16 PM EST Can fear itself bring down a company? When I look at what happened with Tyco (TYC:NYSE - news - commentary - research - analysis), I have to believe that if the company has a lot of debt, the answer is yes. You see, if a company needs to finance itself, it needs good ratings to be able to borrow at reasonable rates. Companies can't go to Capital One (COF:NYSE - news - commentary - research - analysis) or Providian (PVN:NYSE - news - commentary - research - analysis) and get capital as if they were applying for a credit card. They can't just tap the equity markets constantly. They need to be able to borrow money and borrow money fast without a problem. To do that, they need to be rated. The rating agencies, under huge fire for not downgrading Enron (ENRNQ:OTC BB - news - commentary - research - analysis) more aggressively, are now moving swiftly, and it is really freaking people out in the bond market. The bondies watch the stock market, too. They know that when stocks vanish overnight, their bonds could do the same. So fear itself is worth fearing because it causes the rating agencies to panic, which causes the bondholders to panic, which causes the stockholders to panic, which reverberates right back to the rating agencies, who then downgrade again! Talk about a horrid vicious circle. Of course, if the companies don't borrow money, the fear is meaningless. The companies, if they are doing well, just stand there and buy the stock back and take advantage of the fear. But that can't happen if you are heavily indebted. Heavily indebted companies, companies like WorldCom (WCOM:Nasdaq - news - commentary - research - analysis) or Nextel (NXTL:Nasdaq - news - commentary - research - analysis) or Qwest (Q:NYSE - news - commentary - research - analysis) or Broadwing (BRW:NYSE - news - commentary - research - analysis), to mention four that are in the crosshairs of this ratings-bond-stock machine gun, can't break the spiral because they can't buy back stock. They need the money to pay the debt. Without confidence, you get these drawdowns. What breaks them? Typically, acquisitions by others. That seems to be the real problem here; many of the telephone companies that are in this vortex aren't worth anything to anybody because you can build new phone lines much more cheaply than you can buy them, even in bankruptcy, and we have too much capacity to begin with. These drawdowns, unfortunately, are rarely broken by mutual funds deciding enough is enough. They are too scared, and too sheeplike. So they go on and on and on until, well, they venture into the valley of the shadow of bankrupt companies. Which is where they all seem to be headed, regardless of the protestations.