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To: jbn3 who wrote (34345)	3/14/1998 1:34:00 AM
From: Bilow	Respond to of 176387

Hi jbn3; Your local community college will offer classes on accounting. I became fascinated with the subject back when I was in graduate school and picked up a copy of a freshman accounting class text. I read it cover to cover, it is very simple stuff, but has a certain beauty to it. It is nowhere near as dull as people claim it to be. I like to think that it is a balanced :) subject, where a search for the truth is always the object of the accountant. On a balance sheet, the equity is equal to assets - debts. Increasing debt to buy assets has the effect of increasing two numbers, which are subtracted to give equity. Thus equity is left essentially unchanged by taking out a loan and buying facilities with it. Actually, any sort of financial transaction generates expenses, which decrease equity, but not by much compared to the size of the loan. Let's try a real world example. Book value is sort of like your net worth. If you borrowed money and bought a house, you wouldn't suddenly be richer. Instead, you would own more things, (your assets would increase) and at the same time, you would owe more money, (your debts would increase). But your net worth would stay the same. Actually your net worth would decrease by all the little fees that the banks, the state, and the RE agent charged you to make the transaction, but those are small compared to the property value. This should be a pretty complete explanation of a small part of how accounting works, in terms pretty much anybody can understand. -- Carl

To: jbn3 who wrote (34345)	3/14/1998 10:47:00 AM
From: Rosemary	Read Replies (3) \| Respond to of 176387

Any one interested in Warren Buffett's report to shareholders, and his thinking of using cash, and other market conditions, it's here: berkshirehathaway.com From what I read, he doesn't think the markets are overvalued, if interest rates stay down, and ROE's stay up.