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New accounting rules and interpretations are said to boost stocks

Pretty questionable stuff; but,  possible effective.    Real estate investment trusts now report using FFO measure regularly.   That takes out the non-cash charge for depreciation.  Here is a report from AVB using the term with regularity.  I have noticed this in all REIT earnings calls.  http://www.reuters.com/article/marketsNews/idUKN0632078220080206?rpc=44

Banks have recently been allowed to take mortgages off balance sheets to meet lending standards to make new loans. ( I stand corrected,  with further research I found banks and other financial institutions have been using this practice for a long time with regularity making it impossible to figure how bad things could get http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/BanksDarkOffBalanceSheetWorld.aspx )   Not good.   This make a lot of sense why bond markets have dried up.   People have no idea how over leveraged banks are because of home loans, and corporate buy outs.  I take from this the buyout market is dead and not coming back any time soon.  That takes a big up side catalyst out of the market.

Builders are writing off the values of land currently in earnings.   This is said to have a positive effect later if the values go up on these lands it will boost earnings.  Builder DHI talked about being able to raise a billion dollars in free cash flow this year.  Wow!  One could make an argument for a higher price on the stock with cash flow like that.   http://www.marketwatch.com/news/story/dr-horton-swings-loss-builders/story.aspx?guid=%7B8DF49C4D%2D6BAE%2D4CF3%2D8D3F%2D7FA1406E5F27%7D&siteid=yhoof

A reinterpretation of how stocks are valued could be a big positive for the market.   This has to be balanced out  with the other side of the argument about a slower economy.   I remember when they changed dot.com accounting interpretations.  That led to a big crash.  More volatility ahead.   One comment that is hard to argue against that people use is how good is your own situation.  People do tend to have a harder time finding weakness when they look at how good their own personal situation is.

entertainment purposes only

February 7, 2008 - Posted by | Stock investing links, ideas, and opinions. | , , , , , , , , , , ,

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