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To: Jacob Snyder who wrote (50868)	3/29/2002 8:35:14 AM
From: Wildstar	Respond to of 54805

>>>The amazing thing is, how persistent this thinking is. The Bear Market lasted from April 2000 to September 2001, and investors never gave up. Just like consumers never stopped spending, when all historical precedents indicated consumers should have sharply cut back spending, precipitating a recession as severe as in 1973-4. That's what I was expecting, and it never happened. Are these signs of strength, or signs of foolishness? <<< Maybe it's a sign that the bear market it not over.

To: Jacob Snyder who wrote (50868)	3/29/2002 10:23:45 AM
From: hueyone	Respond to of 54805

It's a codependant relationship. Investors want to believe in stocks, company management and brokers want to sell us stocks, we want to see good numbers, so they show us what we want to see. Even if they have to make it up. Good points Jacob. When investors look up a company's PE ratio, they rarely calculate it themselves. Instead, they look it up in one of the many readily available online sources. And those sources never use GAAP earnings. This is mostly true, but the front quote page on Yahoo finance uses GAAP earnings. If you look there, you will see seven out of eight, current G&Ks have a "N/A" in the PE column, meaning they all lost money over the last year on a GAAP basis even without expensing stock options. The problem is not in the regulations and reporting. It's in the minds of investors, in their (continuing) willingness to suspend disbelief. If we all continue to agree to suspend disbelief, it may not be a problem in the short run, but all “cons” eventually come to a bad end. With regard to accounting for stock options, I think we should face the music now and stop this nonsense of treating them as free, non expense item. Exploitation of this glaring loophole has mushroomed out of control in recent years. Closing the loophole will be painful, but I suspect it could be more painful in the long run to the US economy (and our standard of living) to let this loophole with its concomitant result of misallocation of investor capital continue on unabated. Finally, I think the quality companies that this thread has identified---MSFT, CSCO, INTC etcetera, would survive reform for accounting for stock options and get back more to focusing on the business of great product engineering rather than the business of financial engineering. Best, Huey