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To: tom rusnak who wrote (240731)	5/15/2003 7:15:36 AM
From: Earlie	Respond to of 436258

Tom: Larry? Never heard of the bum, nor of his nasty little rag, "The Tech Review" (vbg) From what I hear, it is probably just as well that it is no longer produced as two thirds of the tech sector companies had contracts out on him. (g) Many thanks for the nice comments. They are much appreciated. "F" is not yet "mortally wounded", which for me is when a company actually enters chapter 11 proceedings. I do think it has been stabbed and has sustained gunshot wounds, but the hospitals are sooooo efficient these days that we can't be sure yet. (g) Once a company enters bankruptcy, the probability that its common stock will be either cancelled or diluted to minuscule dimensions, is very high. This is why I call then "mortally wounded". What I have learned to be cautious of (and in fact what I try to take advsntage of) is the fact that during the bankruptcy proceedings, the stock will frequently experience massive and very short term spikes, often doubling within days (as an example, have a look at UALAQ over the past few weeks). These spikes inevitably die just as quickly, but many shorts are cremated in these near-vertical run-ups. I have learned to initially take on small positions and just wait for the spikes, in dealing with "mortally wounded" stocks. You are accurate in your observation that I tend to minimize "naming names". This is for two reasons. In spite of having "cut back", I still have a few consequential clients (who whine when they see stuff they pay for, appear on a certain thread) and I hate it when I am completely wrong on a call (which happens with enough regularity to keep one very humble) and it costs folks money. With respect to specific stocks, I have found it a better idea to just make some oblique references from time to time to the short candidates that I think might be decent targets, and to just poke a little fun in the direction of the "juniors" that appear to have quickly learned to swim after having been tossed into the lake. I still think AMZN will eventually end up as a mortally wounded stock, but not yet. In the past, I frequently wrote about a rather fascinating relationship that evolves when a publicly traded company manages to reach the point where institutions invest in it. Delightfully for those companies, when they get into financial trouble, and they are at risk of going under, usually they can obtain another round of financing through the simple expediency of changing the executive suite or modifying the business plan. They are able to obtain this financing from the involved institutions because each of those fund managers is loath to admit that he made a mistake and is equally as loath to write off the (usually large) investment. From his perspective, it is wiser to keep the pig alive by tossing it some additional bucks. The thinking is that either it will indeed get back on track, or, if it doesn't, there will be an opportunity afforded to "unload" the garbage on the unsuspecting public before it flops again. In point of fact, this strategy works fairly well, so one has to be both patient as well as observant with respect to companies that are wounded but have the right kind of "friends". For me, the risk drops dramatically when chapter 11 occurs, as at that point, the outcome, while it may take plenty of time, is more or less assured. In passing, I should note that I have also found it very useful to be broadly aggressive on the short side (i.e., whack a bunch of my favourite "hate objects") in the early stages of a down leg, especially when that down leg follows a wild and powerful rally (such as the one we are currently completing), and to head back to the fox hole and return to hunting only the "mortally wounded" well before the down leg is completed (hard to call turning points). I miss plenty of the downside that way, but I also live to fight another day. If there is a recurring foolishness to my approach to the market, it is that I inevitably get sucked in too "early" in the late stages of a rally. In other words, I tend to see the rally as ending well before it actually does. Hope this is helpful. Best, Earlie