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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Logain Ablar who wrote (6093)	5/15/2002 5:36:43 PM
From: John Pitera	Respond to of 33421

Hi Tim, It looks like S&P is going to set standards for earnings that are used for their calculations of the S&P 500 trailing PE ratio's. FASB and the SEC and other entities will continue their promulgation of standards, which is appropriate. S&P will give us a set of numbers, whether those have meaning and relevance will be determined by the market, which is how prices have always been determined or "discovered" in the first place. Price discovery is a great concept. From an accounting perspective I disagree with S&P, not that the FASB footnote method is any great shakes. Standards and benchmarks are not determined and applied in a vacuum. The methodologies, valuation parameters and financial disclosure practices certainly move back and forth like a pendulum and they also advance forward on a continuum based on the zeitgeist of the financial era; And obviously financial information has become more quantitative over time due to the computer era. The qualitative approaches to running heavy duty quant type screens also changes over the course of the macro cycle, depending the rate of change of interest rates, inflation levels, the rates of return available in investment alternatives etc. The past 5 years always tends to heavily influence most of the financial modeling done for the next five years. Back to your above observation. What do you dislike about S&Ps approach from an accounting perspective. I'd love to get your insights on this. and as always, I hope you know I highly value your accounting perspective and market insights. John