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

To: Knighty Tin who wrote (35839)	11/12/1998 10:48:00 AM
From: Knighty Tin	Respond to of 132070

To All, Boring philosophical ramblings: 1. Why Xmas lies? Yes, touty cos. tout year round, but the weight of half-lies, misleading headlines and sound bites picks up greatly in the Fourth calendar quarter every year. The simple fact is, this was not always the case. So what has caused Xmas lies to become an annual event? Several possibilities present themselves. First, executives have decided to pay themselves bonuses for "creating shareholder value." Building a real business is a tough game and an uncertain venture. Spinning or lying through your teeth is a simple matter. So, instead of telling the whole story about how business is going, if there are any positive developments, they spin them loudly and either ignore or fine print negative developments. "Beating the estimate," is the key to making a stock go up in the short term. You can do that several ways. You can "guide" estimates low so you can beat them and you can take one time writeoffs and you can buy back stock with cash that should be paid out to shareholders, or through taking down debt, and you can pay employees with options reducing expenses and you can take one time charges that "don't count" and a score of other scams. Most cos. do some or all of these slimy acts to protect executive bonuses. The fact that analysts are, for the most part, either co-opted into the scam or totally perception free animals certainly helps the lies to spread quickly. Another reason is that Xmas is a big selling time, the biggest of the year, and some executives honestly mistake the seasonal swing with real growth. And forecast accordingly. How do you discern which cos. are stupid and which are crooked? In other words, which are mistaken and which are just lying? Still working on that one. <G> But, from an investor's point of view, the result is the same, future disappointment, often as soon as Jan 2. Xmas is also a time where optimism rides high naturally. People who hate each others' slimy guts wish them a Merry Christmas or Happy Holiday. Most are likely to get something they want as a present. (C'mon, friends, the bow doesn't have to be tied perfectly on Selma Hayek. Just put her under the tree. <G>) For years I defended Texas Instruments as being stupid, not dishonest, when they constantly predicted growth in chip sales, in dollars, or 30-40% a year forever. I still believe that they are optimistic dopes, not crooks. Cos. are run by humans and humans become more optimistic about their futures at this time of year. 2. CNBS is really making me bearish. The comments by David "The Brain" about "how anyone could be stupid enough to short Dell and why not just leave it alone" have to be indicators. I have had many people make comments to me that sounded similar. "Why fight Micron at $95 when American Power Conversion has already lost half its value?" "Why pick on Citicorp when it is on a tear?" "How could you ever be stupid enough to buy puts on Chiron?" "You just don't understand SRAM. ISSI is hitting $73 on its way to $173. Why not go after stocks that are already down?" Why do you buy puts on stocks that are going up? Because they are more likely to be the overvalued ones. Duh! It may not always work, but when it does, it is a humdinger. And it sure makes no sense to buy puts on Picturetel at $7. PCTL is my all-time biggest put winner, but even I would not buy a PCTL put with the stock in single digits. Yet, time after time, the bears list their short stocks and I see the names of issues that are in the teens or single digits. You have to have room on the downside to make this game work. That is why so many triple digit stocks are on my list of potential put plays. Good Luck, MB