Was just listening to CNBC. Bill G. mentioned that the SEC was cracking down on proforma. Someone else mentioned that operating earnings are a better guage of "real" earnings. What do you think? Where does on find operating earnings?
Thanks for you observation on cf. I have printed it and will study it. Am wondering if substituting cf (from Value Line) in the PE formulas would give a reliable indication of trends.
As for picks....a week ago I bought some Strong High Yield fund. I do play the junk bond cycle, which is: Buy at the bottom of a recession and sell at the top of a Recovery (if you can identify those points). IMHO we are near a bottom, so I bought some. Picked that fund because it does buy real junk bonds, but does not go much below CCC. The manager, Jeffrey Koch, is IMO 2nd to Wm.Gross as a bond investor. Some people like Vanguard HY because of the company's good reputation....but I believe they have too much in BBB and A to really profit from the junk bond cycle. Best to buy that one when rates are high.
Over the years I have relied on a particular system for much of my portfolio and it has served me well. It is the system advocated by Geraldine Weiss and presented in her newsletter, I.Q. Trends out of LaJolla, CA. Briefly, she has a universe of 350 blue chip stocks that she follows. They all pay a dividend...some big, some small. Each has its own dividend history. But the timing pattern is the same for all. Buy when its dividend is at the high end of its range and sell (or don't buy) when the dividend is at the low end of its range. This system is 35 years old and does well in Bull and Bear markets. It just produces long term consistency and averages around 14%/year. My latest buy, using this sys was in Sept. (IBM just over $100).
On another point, just now I am trying to decide if I should buy RVT. This is not in the G.Weiss system. It is a closed end managed by Royce Associates. They have a good, long term rep. It features dividend paying small caps and mid caps. Just now the style box says small cap blend. The discount is around 9% and the yield is 9.37%
Since I do not have any small caps and the big shots are saying this is a good time for small caps, this looks interesting. What do you think?
For many companies, finding the actual cash earnings is a good trick indeed. I happened to have a discussion of this subject over the holiday with a friend of mine who works for a major accounting firm. She essentially said, "GAAP? Hah-Hah. It's a joke." This was in the context of Enron, so it may not apply to every company, but you have to be wary of any company that does off-balance sheet financing, takes big "one-time" charges etc.
BTW, my friend does not work for Arthur Anderson and she is very glad that she doesn't.
You are right that did sound uppity. If you are living off your portolio, you should be teaching me. You could look at the company's Statement of Cash Flows. It starts with the net income and analyses the cash flow into its component sources- operations, investing, financing. Also, read the notes to financial statements to determine where they jigger the numbers (revenue recogition policies, etc.). That's all I know. Give us some good picks!
They also report net earnings. The following is a paste from the October earnings release:
"PALM BEACH GARDENS, Fla., Oct. 23 /PRNewswire/ -- Correctional Properties Trust (NYSE: CPV - news), a real estate investment trust (REIT), today announced funds from operations for the three months ended September 30, 2001, of $4.1 million, or $0.57 per diluted share, on revenue of $7.5 million. Net income for the third quarter of 2001 was $2.3 million or $0.32 per diluted share."