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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Scott W. who wrote (27243)	4/6/1998 11:42:00 AM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Scott, Let me preface this by saying I don't know the stock at all, so my comments will be about the practices you question, in general. A major broker is unlikely to put out a buy to unload shares. The reason is that the analyst puts out the recommendations and the traders are the ones with the shares. Different profit centers at the firm, if it is large, and the two groups often do not get along all that well. Also, it is doubtful if a 6 figure holding going up a point or two could mean enough to a major firm for the analyst to flush his reputation down the toilet. Smaller boiler shop type of brokerage firms do engage in this sort of thing, which is illegal, and get caught at it from time to time. Mutual funds and other buy side institutions use misdirection a lot more often, but they have no obligation to the people who read what they say, just to their shareholders. There was a case a few years back where Fidelity got into trouble for Jeff Vinick saying Micron was one of his favorite stocks, in Barron's, while he was selling his shares. Though I don't think there was any grounds, legally, Fido paid out some money to stop the bad publicity, if I remember it correctly. The buyers and sellers of blocks of stock have their identities protected by dealers if they don't want to reveal them. One of the big guessing games for journalists is figuring out who did what when. The only way to know for sure is if the purchase or the sale made a significant change in an institution's holdings that made it reportable to the SEC. And by the time you find that out, it is way too late to do anything about it. So, I doubt you will know who the buyer or the seller is unless one or the other wants to publicize the fact. The "risk factors" is what lawyers call "boiler-plate," and you will find it in all 10Ks. I always read that sort of thing carefully, because the co. has to lay out all the risks to avoid being sued or arrested some day in the future. But they usually don't assign probabilities to risks, so the warning that says that nuclear war could be detrimental to earnings gets the same treatment as the warning that Microsoft is now entering their main business with a cheaper price level. So, in general, they mean nothing, and specifically, they can mean a lot. But their existence does not give you a clue about near term or even long term earnings. There are risks to everything and this is just legal CYA fudged by management to make it as useless as possible to the investor. I know this wasn't much help to you, but I would like to end it with a piece of advice. When you buy stocks, you should not be that dependent on the next quarter's eps report. If the products or services are good, if the competitive position and margins are good, and if management is solid, combined with a stock valuation that is reasonable, you should be ok. If any of the above factors are shaky, especially the valuation one, then you should give it some more thought. Good luck, MB