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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Alias Shrugged who wrote (6506)	9/18/1998 1:21:00 PM
From: Paul Berliner	Read Replies (2) \| Respond to of 9980

Mike, Ramsey, I wouldn't put any money on this though until the press starts talking about it and some panic sets in, or else they money would just be dead for too long. Personally, the industries I'd check into would be any with union labor, as you mentioned. In addition to the massive pension liabs. they have, 90% of the companies are poorly run to begin with. I'm talking steel and aerospace. I wouldn't go so far as to place a bet against a pension goliath like GM or Ford. I think maybe Ryerson Tull & Pitt Des Moines and either Boeing or Northrop Grumman may be hurting first. On-again off-again strike problems at the first 2 are a bonus.

To: Alias Shrugged who wrote (6506)	9/18/1998 1:55:00 PM
From: Robert Douglas	Read Replies (1) \| Respond to of 9980

Mike, Thanks for sharing your expertise on this subject. The interesting thing about pensions and how they effect earnings is that it won't take a decline in the market to effect earnings, all it will take is a return to average rates of return. Let me illustrate. Suppose a company usually places a fixed amount in its DB pension plans each year. Further suppose that their accountants told them some time ago that with the rise in the stock and bond markets that they were over-funding the plan and therefore the last three years they have cut this contribution in half, letting the asset appreciation compensate for the smaller contribution. Well this year the market rises at the assumed rate of the plan and this means that the contribution must return to the normal amount. Well Wall Street has grown accustomed to this half contribution and has built it into all future earnings models. This return to normal contributions cuts into projected earnings and a whole bunch of short sited Wall Street analysts suddenly are cutting their forecasts. Snared once again by that sneaky second derivative - the change in the change. I never knew my calculus would come in handy. -Robert