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No. of Recommendations: 3
Regarding an additional purchase of SJM, I am against it. I felt the price was too high earlier and it is higher now. Higher earnings in Q4 do nothing to change my opinion.

When two companies merge they must merge their financial statements. This is a complicated process that involves many decisions/adjustments. Any CFO is going to try to make the merger look successful and they have the oppurtunity to do so. Indeed, WorldCom continually merged with others and used this to make its figures look much better than they actually were. Now, I'm not suggesting that SJM is similar to WorldCom (as far as I know, they have no history of lots of mergers). All I am saying is that that Q4 figures should not cause undue excitement.

I promised a while ago to post a study of WPL. I finally have some free time so I will try to post this in the next week.

I think if you can force yourself to sit on the money until this whole "war thing" is resolved you would be limiting the risk on that investment. I don't see any stocks going anywhere (positive) until the geo-political environment improves. I think there is a lot of downside risk yet, and limited up side.

According to Fisher in Common stocks and Uncommon profits, this is exactly the wrong attitude to take. The reasoning is not that stocks do well during war time but that money does worse due to inflation. He provides stats for this century up until he published his book (1958 I think) and a Fool writer has updated them for the remainder of the century.

Hamish Rose
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