From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #2604 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk Content-Transfer-Encoding: quoted-printable X-No-Archive: yes canslim-digest Sunday, July 14 2002 Volume 02 : Number 2604 In this issue: [CANSLIM] looking forward to next week Re: [CANSLIM] Too Much Building [CANSLIM] accounting scandal - biggest one yet RE: [CANSLIM] Accounting stuff (off topic, sorta) Re: [CANSLIM] Accounting stuff (off topic, sorta) RE: [CANSLIM] Accounting stuff (off topic, sorta) Re: [CANSLIM] Cheap? ---------------------------------------------------------------------- Date: Sun, 14 Jul 2002 17:24:58 -0400 From: "Tom Worley" Subject: [CANSLIM] looking forward to next week nice summary of corporate earnings, news and other events that we will see next week - long address, you may want to cut and paste it in http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&d ist=yhoo&guid=%7B7A22F5F8%2D88D2%2D4F9E%2DB641%2D7AF757703FE9%7D Tom Worley stkguru@bellsouth.net AIM: TexWorley - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Sun, 14 Jul 2002 16:39:12 -0500 From: Gene Ricci Subject: Re: [CANSLIM] Too Much Building This is a multi-part message in MIME format. - ------=_NextPart_000_0365_01C22B54.FC2251B0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Market Going Up!!! I spent 2 1/2 hours buying CDs on Friday... never = knew that a fraction of a point would turn into such a large percent of = the gain.... Just came back from lunch and found that 'another' Wal-Mart is = opening.... soon Dallas will have 'wall to wall' marts. Sam must be = smiling....=20 =20 ----- Original Message -----=20 From: Fred Richards=20 To: canslim@lists.xmission.com=20 Sent: Sunday, July 14, 2002 3:43 PM Subject: RE: [CANSLIM] Too Much Building Gene, Just look at how many gas stations Chevron has closed in the last two = weeks in the DFW market. If the market is going up, why would you close them? -----Original Message----- From: owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com]On Behalf Of Gene Ricci Sent: Saturday, July 13, 2002 9:52 PM To: canslim@lists.xmission.com Subject: [CANSLIM] Too Much Building I've been looking around the Dallas area and all I see is opening of = new stores and malls. Of course the old ones are empty. An example is = COSTCO.... they have 2 stores about 7 miles apart and virtually brand = new... both have more help than customers. Looks like to thirst for = market share hasn't taken a back seat to profits. This 'glut' reminds of = the gas station on every corner, not too long ago. Is it just Dallas or = is this happening all over? Gene - ------=_NextPart_000_0365_01C22B54.FC2251B0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
Market Going Up!!! I spent 2 1/2 hours = buying=20 CDs on Friday... never knew that a fraction of a point would turn = into such=20 a large percent of the gain....
 
Just came back from lunch and found = that=20 'another' Wal-Mart is opening.... soon Dallas will have 'wall to = wall'=20 marts. Sam must be smiling....
  
----- Original Message -----
From:=20 Fred = Richards
To: canslim@lists.xmission.com=
Sent: Sunday, July 14, 2002 = 3:43 PM
Subject: RE: [CANSLIM] Too Much = Building

Gene,
 
Just=20 look at how many gas stations Chevron has closed in the last two weeks = in the=20 DFW market.
 
If=20 the market is going up, why would you close them?
-----Original Message-----
From: owner-canslim@lists.xmis= sion.com=20 [mailto:owner-canslim@lists.xmission.com]On Behalf Of Gene=20 Ricci
Sent: Saturday, July 13, 2002 9:52 PM
To:=20 canslim@lists.xmission.com
Subject: [CANSLIM] Too Much=20 Building

I've been looking around the = Dallas area and=20 all I see is opening of new stores and malls. Of course the old ones = are=20 empty. An example is COSTCO.... they have 2 stores about 7 = miles apart=20 and virtually brand new... both have more help than customers. Looks = like to=20 thirst for market share hasn't taken a back seat to profits. This = 'glut'=20 reminds of the gas station on every corner, not too long ago. Is it = just=20 Dallas or is this happening all over?
 
Gene
- ------=_NextPart_000_0365_01C22B54.FC2251B0-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Sun, 14 Jul 2002 17:48:17 -0400 From: "Tom Worley" Subject: [CANSLIM] accounting scandal - biggest one yet want to put Worldcon, Enron, and many others in perspective? Here's one that beats all of them, collectively!! http://biz.yahoo.com/ap/020714/us_scandals_funny_books_2.html Tom Worley stkguru@bellsouth.net AIM: TexWorley - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Sun, 14 Jul 2002 17:06:37 -0500 From: "Fred Richards" Subject: RE: [CANSLIM] Accounting stuff (off topic, sorta) As some of you know, I first became a CEO at age 28 after being one of the youngest partners of a Wall Street firm. On the wall behind my desk was a plague given to me by my former mentor, it read, "You will always be the last to know what is going on within your own company!" And he was often correct. In all of my businesses, I tried to spend 1/3 of my time visiting customers and/or clients, 1/3 articulating and implementing the corporate vision, overseeing the organization and the excellent people who worked with me, and 1/3 keeping abreast of competitors as well as the technologies which were developing in them. There are so many problems in preparing a realistic view of a corporation's financial health that it would take a book to set them down. Take for example --- the various depreciation and/or depletion policies and methods available for capital equipment here and in overseas markets versus the actual useful life of the equipment and/or asset. In some countries, you just expense the cost of a building and all the equipment in it the first year it is placed in service. In others, the cost of the building must be depreciated over a number of years while the equipment within is depreciated over a variety of time-frames. Of course, all of this depreciation and/or depletion with the exception of expensing it in the initial year does not take into account the effect of currency fluctuation either through inflation and/or world market currency fluctuations. Since the true goal of depreciation is to allow you to amortize the cost over its useful life and supposedly to have sufficient funds to replace the equipment at the end of that useful life, the failure to take currency valuation into account is nothing more than government confiscation of shareholder equity. Many years ago, two of my companies which were not owned in a parent-subsidiary relationship contracted over a six month span for two complete assembly lines for our products from a Swiss manufacturer and bought currency hedges to protect our capital investment prior to delivery. One line went to the Far East and the other to the US. Although each assembly line originally cost the same, the so-called profit after adjusting each assembly line for wage differentials amounted to over 18% of the total profit because of depreciation differences in the two countries during the first year. I am absolutely amazed that the CEO's, CFA's and the entire CPA profession is not up in arms over the new SEC regulations on statement sign-off. There are so many ways to account for GAAP income and expenses and still be legal that unless you have the chart of accounts and the accounting manual for the corporation, you may never know what is going on. I recall a situation in one of my companies where the day after the clean audit was issued by a Big Four accounting firm, I went into the office and opened that Saturday's mail. In one of the bank impressed statements, I found deposits and withdrawals for many thousands of dollars. The account was supposedly only for incidental expenses and the balance was to be under $5,000 at all times. That statement showed over $150,000 flowing through it. The company sustained a fraud loss of $450,000 as the CFO was double paying the social security taxes and taking the refunds and depositing them to the impressed cash account and writing checks to himself. When we questioned the auditors as to why the impressed cash account had not been audited, they said "it was not a big deal and too small to worry about." Right! You can't make honest people honest with regulations. Nor can you make dishonest people, honest with them. That is the big fallacy with regulations. What you will do is lower the willingness of people to expose themselves to risk over which they have little or no control. But you will saddle the company with increased expense to comply with all the new regulations and with bureaucrats who will second-guess your decisions if things don't turn out. And as that mentor of mine said, you will probably only make 50% of your decisions correctly. The key to success is knowing how to cut your losses. I know that this is off-topic! But I had to vent! - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Tom Worley Sent: Sunday, July 14, 2002 4:00 PM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] Accounting stuff (off topic, sorta) I agree, Fred, that this by itself only serves to keep the honest executives honest, while still exposing them to some future complaint or lawsuit or criminal prosecution because an accounting interpretation changes, or some underling was doing something illegal that the CEO or CFO couldn't detect (they can't be everywhere). Look at Barings, huge bank brought down by the illegal trading activity in Asia by one rogue trader. Would have been hard for the parent bank to know what was going on when the Asian subsidiary didn't. Fred, how about some specific suggestions of what you think should be changed or mandated, either as law or by accounting standards? - ----- Original Message ----- From: "Fred Richards" To: Sent: Sunday, July 14, 2002 4:39 PM Subject: RE: [CANSLIM] Accounting stuff (off topic, sorta) This is a perfect example of a "feel-good" regulations that will prevent a lot of good and qualified people for refusing to take on the responsibility of being CEO's and/or CFO's. In fact, I already know of three CEO's who are top-notch and rather young who have been advised by their financial advisors to resign and retire before this terrible regulation goes into effect. At this point, at least two of them are submitting their letters of resignation. Over the last 20 years, a large number of my acquaintances and myself have refused to accept offers to be on public boards. Even with the liability insurance, it isn't worth the hassle. In the end, these types of "feel-good" will have the exact opposite effect. Qualified people will find it increasingly necessary to refrain from the potential financial and criminal exposure. As a result, you are left with candidates who are cronies, politically-correct figure-heads who haven't the faintest idea of what the business is about, and people who could not read a financial statement, interpret the accounting notes, and make a decision if there life depended upon it. - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of J. Lobatto Sent: Saturday, July 13, 2002 8:30 PM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] Accounting stuff (off topic, sorta) Have to admit I find this provision of the law fairly bizarre. How can a CEO or CFO of a huge corporation personally verify the accuracy of a financial report. Is he or she supposed to hire his own auditors to audit the report. If I were facing a possible criminal charge for false certification, I'd want to........ Jon - ----- Original Message ----- From: "Tom Worley" To: Sent: Saturday, July 13, 2002 6:56 PM Subject: Re: [CANSLIM] Accounting stuff (off topic, sorta) > I think you are referring to a new requirement that the CEOs and CFOs > personally certify the accuracy of their Q3 financial reports. A false > certification would be subject to criminal prosecution. > > ----- Original Message ----- > From: "zillagirl" > To: > Sent: Saturday, July 13, 2002 6:54 PM > Subject: Re: [CANSLIM] Accounting stuff (off topic, sorta) > > > I heard that starting in August the law is different and these people and > the CEOs will be breaking the new laws?? Didn't listen to all the details > because I thought Id hear it again by then. I was wondering if a lot of > these companies will try to restate to get in under the wire. > ----- Original Message ----- > From: "Duke Miller" > To: > Sent: Saturday, July 13, 2002 1:53 PM > Subject: RE: [CANSLIM] Accounting stuff (off topic, sorta) > > > > And, if you believe what we've seen lately in the press, the Andersen > > auditors are going to the company's new accounting firms with the > > account. The SAME auditor will be in charge of the audit! > > > > -----Original Message----- > > From: owner-canslim@lists.xmission.com > > [mailto:owner-canslim@lists.xmission.com] On Behalf Of Winston Little > > Sent: Saturday, July 13, 2002 2:56 PM > > To: canslim@lists.xmission.com > > Subject: Re: [CANSLIM] Accounting stuff (off topic, sorta) > > > > > > Let us assume that the second house does a full audit. > > How much confidence can one have that the second audit is "good"? The > > rules for treatment of the financials do not appear to be absolute, thus > > the second audit could just be as full of controversy as the first, > > perhaps in different areas, as the popular sentiment for criticism > > changes. > > > > > > ----- Original Message ----- > > From: "Patrick Wahl" > > To: > > Sent: Saturday, July 13, 2002 1:12 AM > > Subject: Re: [CANSLIM] Accounting stuff (off topic, sorta) > > > > > > > Do you blame them for wanting to do a full audit? > > > > > > On 12 Jul 2002 at 23:05, Tom Worley wrote: > > > > > > > cool way for the Big 4 to increase their revenues and potential > > > > earnings (BTW, who audits the auditors??). This way they will be > > > > able to charge > > for > > > > two full audits instead of just one, at the expense of the corps > > > > (shareholders). > > > > > > > > > > > > - > > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > > -In the email body, write "subscribe canslim" or -"unsubscribe > > > canslim". Do not use quotes in your email. > > > > > > > > > - > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > -In the email body, write "subscribe canslim" or > > -"unsubscribe canslim". Do not use quotes in your email. > > > > > > > > - > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > -In the email body, write "subscribe canslim" or > > -"unsubscribe canslim". Do not use quotes in your email. > > > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. > > > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. > - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Sun, 14 Jul 2002 18:14:41 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] Accounting stuff (off topic, sorta) Thanks Fred, vent some more, it's interesting reading. I think maybe the right solution is more venting from corporate America, peer pressure on all CEOs and CFOs, as well as their staff. You can never regulate or legislate morality or ethics, you either have it, or you don't. - ----- Original Message ----- From: "Fred Richards" To: Sent: Sunday, July 14, 2002 6:06 PM Subject: RE: [CANSLIM] Accounting stuff (off topic, sorta) As some of you know, I first became a CEO at age 28 after being one of the youngest partners of a Wall Street firm. On the wall behind my desk was a plague given to me by my former mentor, it read, "You will always be the last to know what is going on within your own company!" And he was often correct. In all of my businesses, I tried to spend 1/3 of my time visiting customers and/or clients, 1/3 articulating and implementing the corporate vision, overseeing the organization and the excellent people who worked with me, and 1/3 keeping abreast of competitors as well as the technologies which were developing in them. There are so many problems in preparing a realistic view of a corporation's financial health that it would take a book to set them down. Take for example --- the various depreciation and/or depletion policies and methods available for capital equipment here and in overseas markets versus the actual useful life of the equipment and/or asset. In some countries, you just expense the cost of a building and all the equipment in it the first year it is placed in service. In others, the cost of the building must be depreciated over a number of years while the equipment within is depreciated over a variety of time-frames. Of course, all of this depreciation and/or depletion with the exception of expensing it in the initial year does not take into account the effect of currency fluctuation either through inflation and/or world market currency fluctuations. Since the true goal of depreciation is to allow you to amortize the cost over its useful life and supposedly to have sufficient funds to replace the equipment at the end of that useful life, the failure to take currency valuation into account is nothing more than government confiscation of shareholder equity. Many years ago, two of my companies which were not owned in a parent-subsidiary relationship contracted over a six month span for two complete assembly lines for our products from a Swiss manufacturer and bought currency hedges to protect our capital investment prior to delivery. One line went to the Far East and the other to the US. Although each assembly line originally cost the same, the so-called profit after adjusting each assembly line for wage differentials amounted to over 18% of the total profit because of depreciation differences in the two countries during the first year. I am absolutely amazed that the CEO's, CFA's and the entire CPA profession is not up in arms over the new SEC regulations on statement sign-off. There are so many ways to account for GAAP income and expenses and still be legal that unless you have the chart of accounts and the accounting manual for the corporation, you may never know what is going on. I recall a situation in one of my companies where the day after the clean audit was issued by a Big Four accounting firm, I went into the office and opened that Saturday's mail. In one of the bank impressed statements, I found deposits and withdrawals for many thousands of dollars. The account was supposedly only for incidental expenses and the balance was to be under $5,000 at all times. That statement showed over $150,000 flowing through it. The company sustained a fraud loss of $450,000 as the CFO was double paying the social security taxes and taking the refunds and depositing them to the impressed cash account and writing checks to himself. When we questioned the auditors as to why the impressed cash account had not been audited, they said "it was not a big deal and too small to worry about." Right! You can't make honest people honest with regulations. Nor can you make dishonest people, honest with them. That is the big fallacy with regulations. What you will do is lower the willingness of people to expose themselves to risk over which they have little or no control. But you will saddle the company with increased expense to comply with all the new regulations and with bureaucrats who will second-guess your decisions if things don't turn out. And as that mentor of mine said, you will probably only make 50% of your decisions correctly. The key to success is knowing how to cut your losses. I know that this is off-topic! But I had to vent! - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Tom Worley Sent: Sunday, July 14, 2002 4:00 PM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] Accounting stuff (off topic, sorta) I agree, Fred, that this by itself only serves to keep the honest executives honest, while still exposing them to some future complaint or lawsuit or criminal prosecution because an accounting interpretation changes, or some underling was doing something illegal that the CEO or CFO couldn't detect (they can't be everywhere). Look at Barings, huge bank brought down by the illegal trading activity in Asia by one rogue trader. Would have been hard for the parent bank to know what was going on when the Asian subsidiary didn't. Fred, how about some specific suggestions of what you think should be changed or mandated, either as law or by accounting standards? - ----- Original Message ----- From: "Fred Richards" To: Sent: Sunday, July 14, 2002 4:39 PM Subject: RE: [CANSLIM] Accounting stuff (off topic, sorta) This is a perfect example of a "feel-good" regulations that will prevent a lot of good and qualified people for refusing to take on the responsibility of being CEO's and/or CFO's. In fact, I already know of three CEO's who are top-notch and rather young who have been advised by their financial advisors to resign and retire before this terrible regulation goes into effect. At this point, at least two of them are submitting their letters of resignation. Over the last 20 years, a large number of my acquaintances and myself have refused to accept offers to be on public boards. Even with the liability insurance, it isn't worth the hassle. In the end, these types of "feel-good" will have the exact opposite effect. Qualified people will find it increasingly necessary to refrain from the potential financial and criminal exposure. As a result, you are left with candidates who are cronies, politically-correct figure-heads who haven't the faintest idea of what the business is about, and people who could not read a financial statement, interpret the accounting notes, and make a decision if there life depended upon it. - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of J. Lobatto Sent: Saturday, July 13, 2002 8:30 PM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] Accounting stuff (off topic, sorta) Have to admit I find this provision of the law fairly bizarre. How can a CEO or CFO of a huge corporation personally verify the accuracy of a financial report. Is he or she supposed to hire his own auditors to audit the report. If I were facing a possible criminal charge for false certification, I'd want to........ Jon - ----- Original Message ----- From: "Tom Worley" To: Sent: Saturday, July 13, 2002 6:56 PM Subject: Re: [CANSLIM] Accounting stuff (off topic, sorta) > I think you are referring to a new requirement that the CEOs and CFOs > personally certify the accuracy of their Q3 financial reports. A false > certification would be subject to criminal prosecution. > > ----- Original Message ----- > From: "zillagirl" > To: > Sent: Saturday, July 13, 2002 6:54 PM > Subject: Re: [CANSLIM] Accounting stuff (off topic, sorta) > > > I heard that starting in August the law is different and these people and > the CEOs will be breaking the new laws?? Didn't listen to all the details > because I thought Id hear it again by then. I was wondering if a lot of > these companies will try to restate to get in under the wire. > ----- Original Message ----- > From: "Duke Miller" > To: > Sent: Saturday, July 13, 2002 1:53 PM > Subject: RE: [CANSLIM] Accounting stuff (off topic, sorta) > > > > And, if you believe what we've seen lately in the press, the Andersen > > auditors are going to the company's new accounting firms with the > > account. The SAME auditor will be in charge of the audit! > > > > -----Original Message----- > > From: owner-canslim@lists.xmission.com > > [mailto:owner-canslim@lists.xmission.com] On Behalf Of Winston Little > > Sent: Saturday, July 13, 2002 2:56 PM > > To: canslim@lists.xmission.com > > Subject: Re: [CANSLIM] Accounting stuff (off topic, sorta) > > > > > > Let us assume that the second house does a full audit. > > How much confidence can one have that the second audit is "good"? The > > rules for treatment of the financials do not appear to be absolute, thus > > the second audit could just be as full of controversy as the first, > > perhaps in different areas, as the popular sentiment for criticism > > changes. > > > > > > ----- Original Message ----- > > From: "Patrick Wahl" > > To: > > Sent: Saturday, July 13, 2002 1:12 AM > > Subject: Re: [CANSLIM] Accounting stuff (off topic, sorta) > > > > > > > Do you blame them for wanting to do a full audit? > > > > > > On 12 Jul 2002 at 23:05, Tom Worley wrote: > > > > > > > cool way for the Big 4 to increase their revenues and potential > > > > earnings (BTW, who audits the auditors??). This way they will be > > > > able to charge > > for > > > > two full audits instead of just one, at the expense of the corps > > > > (shareholders). > > > > > > > > > > > > - > > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > > -In the email body, write "subscribe canslim" or -"unsubscribe > > > canslim". Do not use quotes in your email. > > > > > > > > > - > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > -In the email body, write "subscribe canslim" or > > -"unsubscribe canslim". Do not use quotes in your email. > > > > > > > > - > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > -In the email body, write "subscribe canslim" or > > -"unsubscribe canslim". Do not use quotes in your email. > > > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. > > > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. > - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Sun, 14 Jul 2002 16:50:24 -0700 (PDT) From: Jack Tencza Subject: RE: [CANSLIM] Accounting stuff (off topic, sorta) Fred, thanks for sharing/venting. Much food for thought here. Jack - --- Fred Richards wrote: > As some of you know, I first became a CEO at age 28 > after being one of the > youngest partners of a Wall Street firm. On the > wall behind my desk was a > plague given to me by my former mentor, it read, > > "You will always be the last to know what is going > on within your own > company!" And he was often correct. > > In all of my businesses, I tried to spend 1/3 of my > time visiting customers > and/or clients, 1/3 articulating and implementing > the corporate vision, > overseeing the organization and the excellent people > who worked with me, and > 1/3 keeping abreast of competitors as well as the > technologies which were > developing in them. > > There are so many problems in preparing a realistic > view of a corporation's > financial health that it would take a book to set > them down. > > Take for example --- the various depreciation and/or > depletion policies and > methods available for capital equipment here and in > overseas markets versus > the actual useful life of the equipment and/or > asset. > > In some countries, you just expense the cost of a > building and all the > equipment in it the first year it is placed in > service. In others, the cost > of the building must be depreciated over a number of > years while the > equipment within is depreciated over a variety of > time-frames. Of course, > all of this depreciation and/or depletion with the > exception of expensing it > in the initial year does not take into account the > effect of currency > fluctuation either through inflation and/or world > market currency > fluctuations. Since the true goal of depreciation > is to allow you to > amortize the cost over its useful life and > supposedly to have sufficient > funds to replace the equipment at the end of that > useful life, the failure > to take currency valuation into account is nothing > more than government > confiscation of shareholder equity. > > Many years ago, two of my companies which were not > owned in a > parent-subsidiary relationship contracted over a six > month span for two > complete assembly lines for our products from a > Swiss manufacturer and > bought currency hedges to protect our capital > investment prior to delivery. > > One line went to the Far East and the other to the > US. Although each > assembly line originally cost the same, the > so-called profit after adjusting > each assembly line for wage differentials amounted > to over 18% of the total > profit because of depreciation differences in the > two countries during the > first year. > > I am absolutely amazed that the CEO's, CFA's and the > entire CPA profession > is not up in arms over the new SEC regulations on > statement sign-off. There > are so many ways to account for GAAP income and > expenses and still be legal > that unless you have the chart of accounts and the > accounting manual for the > corporation, you may never know what is going on. > > I recall a situation in one of my companies where > the day after the clean > audit was issued by a Big Four accounting firm, I > went into the office and > opened that Saturday's mail. In one of the bank > impressed statements, I > found deposits and withdrawals for many thousands of > dollars. The account > was supposedly only for incidental expenses and the > balance was to be under > $5,000 at all times. That statement showed over > $150,000 flowing through > it. > > The company sustained a fraud loss of $450,000 as > the CFO was double paying > the social security taxes and taking the refunds and > depositing them to the > impressed cash account and writing checks to > himself. When we questioned > the auditors as to why the impressed cash account > had not been audited, they > said "it was not a big deal and too small to worry > about." Right! > > You can't make honest people honest with > regulations. Nor can you make > dishonest people, honest with them. That is the big > fallacy with > regulations. What you will do is lower the > willingness of people to expose > themselves to risk over which they have little or no > control. > > But you will saddle the company with increased > expense to comply with all > the new regulations and with bureaucrats who will > second-guess your > decisions if things don't turn out. And as that > mentor of mine said, you > will probably only make 50% of your decisions > correctly. The key to success > is knowing how to cut your losses. > > I know that this is off-topic! But I had to vent! > > > > -----Original Message----- > From: owner-canslim@lists.xmission.com > [mailto:owner-canslim@lists.xmission.com]On Behalf > Of Tom Worley > Sent: Sunday, July 14, 2002 4:00 PM > To: canslim@lists.xmission.com > Subject: Re: [CANSLIM] Accounting stuff (off topic, > sorta) > > > I agree, Fred, that this by itself only serves to > keep the honest executives > honest, while still exposing them to some future > complaint or lawsuit or > criminal prosecution because an accounting > interpretation changes, or some > underling was doing something illegal that the CEO > or CFO couldn't detect > (they can't be everywhere). Look at Barings, huge > bank brought down by the > illegal trading activity in Asia by one rogue > trader. Would have been hard > for the parent bank to know what was going on when > the Asian subsidiary > didn't. > > Fred, how about some specific suggestions of what > you think should be > changed or mandated, either as law or by accounting > standards? > > ----- Original Message ----- > From: "Fred Richards" > To: > Sent: Sunday, July 14, 2002 4:39 PM > Subject: RE: [CANSLIM] Accounting stuff (off topic, > sorta) > > > > > This is a perfect example of a "feel-good" > regulations that will prevent a > lot of good and qualified people for refusing to > take on the responsibility > of being CEO's and/or CFO's. > > In fact, I already know of three CEO's who are > top-notch and rather young > who have been advised by their financial advisors to > resign and retire > before this terrible regulation goes into effect. > > At this point, at least two of them are submitting > their letters of > resignation. > > Over the last 20 years, a large number of my > acquaintances and myself have > refused to accept offers to be on public boards. > Even with the liability > insurance, it isn't worth the hassle. > > In the end, these types of "feel-good" will have the > exact opposite effect. > Qualified people will find it increasingly necessary > to refrain from the > potential financial and criminal exposure. > === message truncated === ===== Jack __________________________________________________ Do You Yahoo!? Yahoo! Autos - Get free new car price quotes http://autos.yahoo.com - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Sun, 14 Jul 2002 17:24:41 -0700 From: "zillagirl" Subject: Re: [CANSLIM] Cheap? There is quite an extensive article in the L.A. Times today about the markets. In there it states that " the average stock in the S & P 500 is priced at about 19 times this years expected earnings per share, by many wall street estimates. That is far above the historical average price -to -earnings ratio of about 14." I think I like these numbers a little better. What's up-am I missing something here? - ----- Original Message ----- From: "Tom Worley" To: Sent: Saturday, July 13, 2002 7:06 PM Subject: Re: [CANSLIM] Cheap? > I make no investment decisions, or even select stocks for watching, on the > basis of their history. The market, and stock prices, moves on expectations. > Those expectations are based on projected earnings, not what they did last > year, or five years ago. > > ----- Original Message ----- > From: "Rocky Sanghvi" > To: > Sent: Saturday, July 13, 2002 9:41 PM > Subject: RE: [CANSLIM] Cheap? > > > Lois, > > This was one of the news items on the nasdaq.com website frontpage. If you > wish to see it you need to go to nasdaq.com and scan some of the older news > items. > This was was from the Dow Jones News Wire. > > Best Wishes > Rocky > > PS Tom - I am not sure why we shouldnt look at trailing earnings as a part > of your overall investment outlook. Yes maybe not CANSLIM (which only looks > at future earnings) but if we are looking at charts and history we may as > well consider historical facts such as what the news item was referring to. > > -----Original Message----- > From: owner-canslim@lists.xmission.com > [mailto:owner-canslim@lists.xmission.com]On Behalf Of Lois > Sent: Saturday, July 13, 2002 9:54 AM > To: canslim@lists.xmission.com > Subject: Re: [CANSLIM] Cheap? > > > Rocky, > > Would you be so kind as to post a link for the info below? > > TIA, > Lois > > Rocky Sanghvi wrote: > > > > S&P 500 Price/Earnings Ratio At 37.31, Down From 37.65 > > > > NEW YORK -(Dow Jones)- The price/earnings ratio of the Standard & Poor's > 500 > > index at the close of trading Friday, July 12, was 37.31. > > Thursday, the ratio was 37.65. > > > > The lowest price/earnings ratio on the S&P 500 came in the second quarter > of > > 1949, when the reading slipped to 5.9. Over the last decade, the low was > > 15.77 in the first quarter of 1995. > > > > The price/earnings ratio, known as the multiple, is a measure of the > average > > stock price divided by the average earnings per share. The earnings data > is > > based on the trailing four quarters. > > > > - > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > -In the email body, write "subscribe canslim" or > > -"unsubscribe canslim". Do not use quotes in your email. > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. > > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. > > > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. > - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ End of canslim-digest V2 #2604 ****************************** To unsubscribe to canslim-digest, send an email to "majordomo@xmission.com" with "unsubscribe canslim-digest" in the body of the message. For information on digests or retrieving files and old messages send "help" to the same address. Do not use quotes in your message.