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To: Bid Buster who wrote (218951)	2/5/2003 5:30:20 PM
From: GraceZ	Respond to of 436258

What I wrote wasn't meant as an argument, as far as I'm concerned this kind of discussion is really the only kind of useful discussion you can engage in on a stock forum. It gets to the heart of what it is that you look at when you are trying to judge which companies to take a position, short or long. What I simply wanted to point out even if the business climate can change in a heart beat, as you point out, you still only have the past performance to try to predict the future. I know that things can change in a heart beat and this is why the future can't be predicted either way and you need to be flexible and use stop loss orders. The best you can do is look at how a company has performed over time (how similar companies have performed over time) and see if there is something that sticks out like an expense that is getting out of line. I do my own analysis primarily because I don't believe the sell side analysis or the company's guidance. Believe it or not the kind of analysis I do is even more useful on the short side then it is on the long primarily because it immediately points up problem areas where expense items are rising faster then revenues. It's more useful then looking at revenue numbers or margins or even the bottom line. It shows whether the company is maintaining cost controls and whether or not the different line items exhibit any level of reliable predictability or if they are irratic and unpredictable. There are many companies which have extremely predictable earnings, usually they are fully valued because of this. Occassional you find one where the earnings are predictable, growth is predictable and yet the market affords the company zero premium because there is some unknown risk, or some past known risk which no longer exists or isn't particularly important. In order to get to guessing about the unknowns it helps to know the knowns. You could simply say to yourself, well things could change overnight so I dare not hold any positions. You don't need to hold any positions. Starting from that premise, I'm still finding companies where the risk/reward of holding is favorable (short and long).