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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: petal who wrote (65848)	12/30/2020 4:42:43 PM
From: Lance Bredvold	4 Recommendations Recommended By bruwin petal S. maltophilia The_Commodore Read Replies (2) \| Respond to of 78956

I also have been nonplussed by the continually rising market and generally attribute it to low interest rates which make income stocks the only place I can go with my funds. But I also notice a couple of very frightening accounting habits which are spiking apparent earnings. 1) The use of "adjusted" earnings and having those numbers taken as real earnings by nearly everyone. I use Value Line's sheets as a convenient way to have my portfolio in consistent format and on a single page and I notice more and more that the adjusted number is the one they list on quarterly earnings. 2) The buy out by both private equity and public companies causes huge increases in good will. Suddenly assets are increased for no good reason and book value goes up. As I look at QCOM with it's billions worth of patents for which they've paid engineers (and support staff) billions to develop and patent--also defend legally. They came very close to being taken over by AVGO a couple years ago and had that happened all that intellectual property would have wound up in intangibles and good will==while IP is undervalued by most investors in QCOM now. 3.) Among my smaller companies I saw a habit of selling real property and then leasing it back. That can provide a sudden increase in cash flow or book value. Apparently the accounting standards bodies are taking steps to decrease that trick as I see something called "lease obligations" and "asset rights" instead of just suddenly moving long term investments into cash. 4.) Oh, and of course there's the obvious overvaluation of many companies with no earnings but an interesting/promising story--but that one we all know about anyway. I could be wrong about these guesses as it's many years since I studied accounting, so take my ideas as guesses more than facts.