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« When to Pull the Trigger | Main | Did You Miss the Big Day? »

November 12, 2007

Comments

spikem

Thanks, Bill. I took care of him!

Bill aka NO DooDahs!

I deleted Tai as a spammer from one of my sites. Every vid they posted to YT is an ad for Zecco, as is the video. Do not click it, not that it's dangerous, it's just stooopid, but there's no need to give them the traffic.

muckdog

"Consuming information" comes on my list right behind consuming chocolate chip cookies and potato chips. I often do all three at the same time, btw.

Recession unlikely. AGREED! The doomers and gloomers must've missed the last few GDP numbers. While the economy isn't rippin' and roarin' it isn't tankin' either. Kind of a slow thing that folks feel uncomfortable with, like kissing your sister.

It's the Kiss Your Sister Economy. KYSE.

Nice stock pick-ups at the end of your column, Dr. Jeff.

oldprof

Bill - You are quite right about the appeal to authority aspect. I actually had your blog quiz in mind as I wrote this piece.

One feature of 'A Dash' is that our expertise is in identifying experts. We are consumers of information. Most other bloggers are also, but they do not realize it!

I subject every source to the LINQCRED approach, and try to select the best to highlight, e.g., Malpass, ECRI. It does not mean that they are always right, but rather that they are worth listening to. Sam Zell on real estate has to be regarded as first rate, unless we think he is talking his book somehow.

Thanks for a good observation.

Jeff

Bill aka NO DooDahs!

Hey Jeff! I just realized that this is a classic "appeal to authority" argument!

The quote I made was referenced in my blog article, it was from
http://www.nysscpa.org/cpajournal/2002/0102/features/f013602.htm
See sidebar 2 link at the bottom of the page.

Supposedly the CPA Journal of the NY State Society of CPAs is an "authority" on Free Cash Flow ....

Bill aka NO DooDahs!

David, we run into definitional problems with Free Cash Flow.

http://www.billakanodoodahs.com/2006/09/fundamental-analysis-for-solvency-and-earnings-quality/

"… there is no real consensus on the definition of cash flow or free cash flow … This can lead to considerable misinterpretation when investors are relying on differing cash flow information provided by companies."

It's ALL speculation, the only question is the degree of research and planning we use to speculate ...

David Merkel

If many are seeing Doomsday on FAS 157 on 11/15, they are missing the bigger issues. First, the effects only begin when the companies report; many have started to do so already. Second, this is just one in a continuing series of downgrades of our accounting rules. FAS 141, 142, 157, and 159 have all made our accounting less conservative. The forthcoming ability to use IFRS in place of GAAP will be no different. Mandate the use of IFRS if we want international uniformity, fine, but don't let accounting standards be optional.

Now, in the end, only cash flows matter. Valuations versus free cash flow will not be affected, difficult as those are to measure. But valuation versus book will shift marginally lower, because the balance sheet accounting will be less conservative.

There are issues here on a micro level, and good analysts should be aware of them, but accounting doesn't affect the cash flows, only how we interpret the cash flows. The market as a whole should not be affected, but individual stocks may look more or less desirable as the accounting rules change.

Tim

This is a time when individual investors can buy great companies at prices not seen in a while. The hedge fund lemmings will throw the babies out with the bath water as the run over the cliff (metaphor alert!). Sharp investors will take advantage.

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