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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: RR who wrote (47779)	2/17/2002 1:04:15 AM
From: stockman_scott	Respond to of 65232

Survey Finds IT Demand Is Rebounding thestreet.com

To: RR who wrote (47779)	2/18/2002 11:25:48 PM
From: stockman_scott	Respond to of 65232

Are Wall St. Strategists Too Clever? Sun Feb 17, 4:37 PM ET By Per Jebsen NEW YORK (Reuters) - Wall Street strategists are very, very smart -- yet some investors, remembering last year's host of wrong market calls, refuse to be impressed by the dazzling displays of brilliance. Most often, the highly paid market gurus express their intellects through mastery of numbers, charts, and market jargon, demonstrating an ability to make intriguing comparisons between the price-earnings multiples of today and yesteryear. They also employ the deft turn of a phrase or right literary allusion. That's' because numbers alone aren't enough in the highly competitive investment world, where many brokerage firms are working hard to get the attention of investment professionals as well as individual investors. As a result, surprising inklings of brilliance, hints of literary and philosophical wit are entering the gurus' prose. Consider the following captions: "Gorillas in the Mist" ... "Archimedes Has Not Left the Building" ... "The Unwitting Creation of an Uber V Forecast" ... "No longer Buck Naked, But Still No Armani" ... "An Anti-Lake Wobegon View of the World." A rube might, at first glance, assume that these were poems or perhaps film school projects. Instead, the captions are from the weekly output of Steve Galbraith, Morgan Stanley's new chief U.S. investment strategist. Lehman Brothers strategist Jeff Applegate last week spoke of how stock prices "are simply the reified form of profit expectations." Credit Suisse First Boston guru Tom Galvin this week titled his strategy piece, "I Love LUCI," a reference both to the venerable TV sitcom and to the Liquid U.S. Corporate Bond Index. Some incorrigible souls reject these intellectual pyrotechnics, having written off all strategists for the sins of the many who made predictions such as that the Standard & Poor's 500 Index <.SPX> would rise several hundred points last year, when in fact it fell 13 percent. "You can't turn on the television or pick up a newspaper without it being full of these birds," said Martin Whitman, chairman of the Third Avenue Funds, a mutual funds group. "They're in the business of giving comfort but they don't really know anything," he said. "Who can predict the market? Nobody, really." The stature of Wall Street strategists has been diminished by the demise of the great '90s bull market, which caused the bullish forecasts of market seers such as Goldman Sach's Abby Joseph Cohen, UBS Warburg's Ed Kerschner, CSFB's Galvin and Lehman's Applegate to prove less than prescient. "Their crystal ball doesn't seem to be all that translucent," said William Rutherford, president and chief executive of Rutherford Investment Management. "I'd prefer some hard facts, and they have opinions ... they're frequently not very helpful opinions." Aficionados demur that the strategists are in more than the business of saying stocks will trade at such and such level on a given day -- and that their opinions contain valuable insights into the market's direction. For Galbraith, who took over from Morgan Stanley's veteran stock picker Byron Wien at the start of December, references that might seem opaque often tie in neatly with particular themes above investing. Gorillas in the Mist, the title of a 1988 movie starring Sigourney Weaver that shows apes to better advantage than humans, refers to how category leaders are growing ever stronger while their competitors lag. Archimedes, the ancient Greek mathematician and engineer whose fame in part rests on solving a problem of leverage, signifies U.S. companies' stubbornly high debt and hence earnings volatility. An Uber V Forecast, which has overtones of German philosopher Friedrich Nietzsche, describes the current, mistaken consensus projection of sharp earnings recovery in the fourth quarter. Talk of reified profit expectations and mention of classical thinkers has purposes beyond idle wordsmithery. Strategists such as Galbraith, Applegate or Galvin wield their erudition to impress an elite audience of wealthy investors and key money managers -- and to garner favorable mention for their employers in the media and elsewhere. The gurus come in handy as speakers at industry luncheons and panels, or for hobnobbing with clients at fancy shindigs. "They are to the securities world what the news anchors are to the cable and TV networks, said Marshall Front, chairman of Front Barnett Associates, which has $2.3 billion of assets. "They're the point people for a lot of news and information." Indeed, it is dangerous for strategists not to make themselves heard above the din and clamor of Wall Street research. Former Merrill Lynch chief strategist Christine Callies was replaced last year by quantitative expert Rich Bernstein in part because her bosses concluded she had failed to attract enough outside attention. Don't dismiss strategists out of hand, supporters say. Wall Street gurus are "interesting to read, not as interesting as something that's real literature, but some of the writers are really quite clever," said Front Barnett's Front. "Would I base my investment approach on these utterances? No," he said. "But they have interesting insights and occasionally there's a nugget that's worth pondering." ______________________ btw, RR 'a Porch Party' in Colorado sounds like an idea worth exploring...=) regards, -Scott

To: RR who wrote (47779)	2/19/2002 2:00:47 PM
From: stockman_scott	Respond to of 65232

End of an Era By E. J. Dionne Jr. Washington Post Columnist Tuesday, February 19, 2002 There is no other period in the nation's history when politics seems so completely dwarfed by economic changes, none in which the life of the country rests so completely in the hands of the industrial entrepreneur. The industrialists of the Gilded Age were . . . men of heroic audacity and magnificent exploitative talents -- shrewd, energetic, aggressive, rapacious, domineering, insatiable. They directed the proliferation of the country's wealth, they seized its opportunities, they managed its corruption, and from them the era took its tone and color. -- Richard Hofstadter "The American Political Tradition" Change the "industrial" references to "high tech" and Hofstadter's description of the late 19th century sounds like a brilliant evocation of our own 1980s and '90s. Read the great historian's passage with the Enron scandal in mind. Is a single word out of place? The period Hofstadter describes was followed by the Progressive Era, a time when Americans reacted against the power of "rapacious, domineering, insatiable" capitalism and pushed the country toward a more reasonable version of the system. Hofstadter accepted that the big capitalists of the earlier era were brilliant -- "shrewd, energetic, aggressive" -- just as we accept that the capitalists of our age are no slouches. But if our forebears came to understand that something was terribly wrong with the sharp guys, so do we. Who cannot cheer the punishment that arrogance now confronts? Until recently, those who asked any questions about why Enron or some profit-free high-tech company was so brilliant, the characteristic response was: "You just don't get it." It turns out that the people who supposedly didn't get it were posing questions that needed to be asked. The era that's ending saw regulators as nothing but meddlers getting in the way of genius. But capitalism doesn't work without regulation. Powerful people will take advantage of their muscle unless someone -- like it or not, that usually includes the government -- keeps an eye on them. To pick an extreme example: Imagine that many people died because a fast-food company sold tainted hamburgers on a regular basis. Word would, indeed, get out. Customers would stop eating the hamburgers. The market would eventually pummel the company's stock. But if the market "worked" in this little tale, it surely didn't save the people who ate the bad burgers. Does anyone think that the market's "genius" in punishing the company means we can repeal the Pure Food and Drug Act? In Enron's case, you simply can't say its fall proves the market works when so much avoidable damage was done before the market acted. That is why Enron has ended an era. For a very long time, we've assumed that the fundamental conflict in capitalism is between the owners and the workers. Enron proves that the real conflict is between insiders and outsiders. The losers in the Enron case are both stockholders and workers. This suggests a new form of politics both inside corporations and in the country as a whole. "It used to be said that because so many people had 401(k)s, you couldn't do class politics anymore," said David Dreyer, a former Treasury Department official and Democratic activist. "Now, with Enron, because so many people have 401(k)s, you can do class politics." This new class politics between insiders and outsiders is good for capitalism. It insists that corruption and insiderism distort both the market and politics. It asserts, in Hofstadter's terms, that when politics are dwarfed by powerful economic actors, we forget the value of prudent rules and regulations enforced by an honest government. In the modern corporation, enormous power has been vested in top executives. These insiders, supported by pliant boards of directors, reap benefits through gargantuan salaries and stock options. The old assumptions were: (1) All the benefits heaped on top management would benefit stockholders, and (2) pushing CEOs to do whatever it took to produce profits in the next quarter would benefit shareholders and employees in the long run. After Enron, it can never again be taken for granted that big benefits for people at the top of companies are consistently in the interest of shareholders. And Enron's manic efforts to hide losses to keep pushing up stock prices could not have been more harmful to the interests of everyone except the insiders. Paradoxically, the pressure to move stock prices up fast can be bad for shareholders, especially those who are in for the long haul. The era of the swaggering capitalist is over. The era of the reasonable capitalist and responsible government is beginning anew. Or so we have to hope, and demand. © 2002 The Washington Post Company

To: RR who wrote (47779)	2/19/2002 2:20:19 PM
From: stockman_scott	Read Replies (1) \| Respond to of 65232

Amid Ex-Enron Chief's Troubles, a Rocky Mountain High... By MIMI AVINS, LATimes Staff Writer February 19, 2002 latimes.com

To: RR who wrote (47779)	2/20/2002 7:38:36 PM
From: stockman_scott	Respond to of 65232

Chief fudge-the-books officer salon.com Enron CFO Andrew Fastow wasn't a renegade -- he was just doing his job. - - - - - - - - - - - - By Dave Lindorff Feb. 20, 2002 \| One of the main victims of Enron's collapse has been the reputation of accounting firms -- the so-called gatekeepers who are supposed to prevent corporations from financial skulduggery. But in trying to fix things, critics who are calling for tighter accounting regulations may be looking in the wrong place. The problems that felled Enron -- wildly inflated earnings and enormous off-balance-sheet costs -- were not the work of Enron's auditor, Arthur Andersen. The fancy financing and fancier bookkeeping were, by most accounts, masterminded by Enron's chief financial officer, Andrew Fastow. And, far from being a renegade, Fastow (who declined to testify before Congress earlier this month) was just doing his job -- or, at least, he was doing precisely what today's CFOs are being told to do. The CFO, traditionally, was the executive entrusted with ensuring that a company operates with financial discipline -- not excess. But in a business environment where investors are demanding ever-increasing earnings every quarter and anything less than 20 percent earnings gains is considered lackluster performance, CFOs are under steadily escalating pressure to fudge the books to make things look better than they really are. This is a relatively recent phenomenon. It wasn't that long ago, suggests Warren Bennis, a professor of management at the University of Southern California, that a company's chief financial officer was considered staff, not part of the executive elite. "Even 12 or 13 years ago," he says, "CFOs were not regularly included at the table in executive meetings. Now the CFO is part of the club." A few decades ago, the CFO's main job was confined to acting as the link between a company and its bankers. No more. In the go-go 1980s and especially the '90s boom years, daring corporate finagling became the name of the game -- and in the case of many recent technology start-ups, which had no earnings and sometimes not even any revenue, the only game. There were convertible bonds, junk bonds, derivatives, venture funds, pension funds, hedge funds, tracking stocks, spinoffs, joint ventures and, of course, on the cost side, a bewildering array of gimmicks, from offshore domicile changes to leasing deals, deferred employee compensation plans and purportedly one-time expense write-offs. Few if any of these maneuvers had anything to do with producing anything (except in some cases more money), but they did make a corporation's books look good. And responsibility for executing these maneuvers belonged to the new star executive player -- the CFO. "The CFOs, who were supposed to be policing managers, have stopped policing and have become facilitators for managers," says Bruce Greenwald, a professor of finance at Columbia University's Graduate School of Business. And since the CFO, quite often, is the only member of the executive team who actually understands the details of modern corporate finance, the position has become a hot spot for corporate trouble. "In the CFO, you have someone with highly technical skills that these days the CEO and COO often don't even understand, yet there has to be this web of trust," says Bennis. "It's a paradox." At the same time, says Bennis, the CFO is under constant pressure from the CEO, COO and president of the company to deliver ever increasing earnings and revenues. It is, he suggests, a recipe for Enron-style debacles.