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I have a friend who is a tax director of a Fortune 50 company who is very
involved with the preparation of that company's consolidated return.
Earnings are very actively "managed". This is another area that most people
just do not understand. It would be difficult if not almost impossible for
anyone to really know the quality of a large corporation's earnings unless
they are an insider.
This is another reason I'll take technical analysis/charts any day over
fundamental analysis. These analysts on CNBC who think they can consistently
project some company's earnings out three or four quarters are delusional.
It does make for entertaining TV.
Idea for a new TV show: "Earnings Island".
Regards,
Tom Alexander
----- Original Message -----
From: <nchrisc@xxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Thursday, March 08, 2001 9:37 AM
Subject: Re: [RT] Morning update
> --- In realtraders@xxxx, "Earl Adamy" <eadamy@xxxx> wrote:
> > Are you suggesting that the DJIA is not generously endowed with
> historically
> > high PE's which far exceed the growth rate of company earnings? If
> so, I
> > disagree - starting right at the top, GE carries a PE of 35 with an
> earnings
> > growth rate of 16% and the charts strongly suggest that GE would be
> > extremely fortunate to escape with another 15% hair cut to $38 and
> that's if
> > they somehow manage to avoid major defaults on all the industrial,
> > commercial, and consumer paper they hold.
> >
> > Earl
>
>
> Earl,
>
> I have been following GE with great interest lately -- seems like it
> may hold the psychological key to the Dow, NYSE, etc. As to
> defaults, GECC has a remarkable willingness/ability to "restructure"
> bad transactions into things which did not necessarily make economic
> sense, but were more favorable to earnings. I worked for one of
> their largest borrowers in the early 90s and saw it happen
> personally. (I don't believe they still have fully recognized hits
> they took in that era.) They also are good at parking earnings in
> good times to recognize at their discretion in bad. Whether they
> will be able to continue to play that game sufficiently remains to be
> seen. Chart looks lower to me, FWIW.
>
> Regards,
> Chris
>
>
>
>
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