they dont build all those pretty buildings in vegas

Post #323,802 by boxley 3/30/10 9:37:19 PM Reply	they dont build all those pretty buildings in vegas by giving away money nother, stock market is no different. Its no difference than blackjack, craps or roulette or indexed stock If we torture the data long enough, it will confess. (Ronald Coase, Nobel Prize for Economic Sciences, 1991)
Post #323,807 by Another Scott 3/30/10 9:56:27 PM Reply	We're talking past each other. Yes, stock prices are based on expectations and hunches - in a way, it's very similar to playing Vegas. But it's *also* tied to something tangible - a share of ownership of the value (over some future period of time) of the company and its profits. Compare GM's stock price in November 2007 with its price in April 2009. $30-ish versus $1-2-ish. Stock prices collapse when companies have huge losses. WorldComm, Enron, GM, Chrysler, etc. GM's stock price being in the $30s shows that its $38B charge was not "real money". If that charge were real, the company would have had to be liquidated and the stock would have been worthless. AT&T's $1B charge is *presently* in the same category. It's a "non-cash charge". It's not a "loss" and doesn't impact P&L. Nobody knows what AT&T's stock price is going to be in 2013, so saying that any changes then are going to be the result of this charge is silly. The stock market said it has no impact on the stock price. What does the stock price have to do with P&L? See the first paragraph. A company that is bankrupt does not have a high stock price and a high market capitalization. HTH. Cheers, Scott.
Post #323,813 by beepster 3/31/10 12:32:50 AM 3/31/10 12:39:07 AM Reply	No, you're still not there the $1B charge does not hit the P&L >yet<. An accrual is a balance sheet item that is essentially a forced savings account for something that will hit the P&L in the future. The charge is real and will eventually come from revenue in a P&L. Post edit: not entirely accurate...it will come from revenue now, and impact P&L now...but the nature of the accounting entry at this point is internal..it comes from revenue and transfers to the balance sheet...(non cash meaning the cash isn't going out the door yet)...it will become a cash item when the expense is realized in 2013. I will choose a path that's clear. I will choose freewill. Edited by beepster March 31, 2010, 12:39:07 AM EDT Expand All History
Post #323,822 by boxley 3/31/10 8:48:35 AM Reply	nit If you increase liability now it impacts net profit now If we torture the data long enough, it will confess. (Ronald Coase, Nobel Prize for Economic Sciences, 1991)
Post #323,827 by beepster 3/31/10 11:14:31 AM Reply	Ayup which is why I added the edit. I will choose a path that's clear. I will choose freewill.

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