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  • Analysts' Forward-Looking Estimates: Just Plain Nuts [View article]
    Analyst's prime concern is keeping the companies they cover happy so they can get information from them. Thus to trust their reports are like trusting Bush Jr. with the country's well being.

    Even if the analysts were spot on for earnings the next quarter, basing prices on forward P/E is risky in a recession given they are most likely decelerating or declining. Cash flow and cost of capital become the major concern. Unfortunately, many companies were high on the hog with cheap corporate bonds and lot's of convertible 0 coupon bonds that made them feel money was free.

    Don't expect things to go back to those days of loose capital and terrible margins where earnings were based on massive leverage.
    Oct 24 00:34 am |Rating: 0 0
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