To: Charles Hughes who wrote (15517 ) 12/24/1997 9:13:00 AM From: Reginald Middleton Respond to
<I agree, I think. (Correct me if you don't think I do ;-). >Earnings are known to be an awful, and inaccurate measure of wealth accumulation and performance. Anyone decently versed in accounting can tell you, or you could just count the money yourself as a layperson. BUT, nearly all of the retail community rely on earnings. Why? Naivete, it is not like the information is not readily available. There is a ton of stuff on my site to steer you in the right direction. So when the big boys need to unload inventory or buy something cheap, they tell you a earnings story. You believe it, act on it, and create liquidity in the markets. It is no conspiracy, it is ignorance (or to put it less harshly, a lack of knowldege).Asset quantification - many retail folk think that you can lood on a balance sheet an see the assets and liabilities. Any good accountant should tell you don't believe what you look like. You can't bring a balance sheet to the bank (unless its the GAAP Bank of America) and equivalant statement. Yet people use the balance sheet to quantify assets and liabilities in a real world sense instead of a GAAP sense. Consequently, you provide liquidity for those who invest on economic (in lieu of an accounting) basis. Food for thought: where are brand values on balance sheets, currency hedges, swaps, notional amounts, counterparty risks, value of human capital, the list goes on..Trading - I notice a lot of people on this thread ask "What will XXX stock be at next month?" The real answer should be I don't care. Teh equity market si a long term game, and the real money is to be made by the long term investors. Nearly every repudiable text on wealth creation stresses a minimum five year investment horizon for equities (with a plethore of statistical evidence to back it up) yet the SI crowds insist on short term trading/speculation and donating oppurtunity profits and commissions to the big boys. You see, you do this to fill a vacuum in the void. You provide liquidity in the equity markets. So next time you see the fed funds rate drop, or the Fed inject cash into the system, just remember you have also done your part in supplying liquidity as well:-) rcmfinancial.com
