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Author: Larry01Gott Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 3431  
Subject: Re: How I select my stocks Date: 8/19/2003 12:13 AM
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reverendh, here is a medium-size answer to your first of two questions.

Using OPM - other people's money - actually refers to debt, borrowing that which must be paid back rain or shine, good business or bad.

On a personal scale, the excessive use of credit cards is a counterpart.

On a national scale, an excessive national debt is a counterpart.
On a California scale, an excessive state debt is a counterpart.
(Democrats: Tax and spend; Republicans: Borrow and spend; Common Sense: Receive and spend)

On a corporate scale, an excessive use of credit subtlely presumes that the future will always be like the past (upward and upward), always providing enough income to allow both substantial r&d and debt payment.
[Borrow and Spend].

Almost all the major high-flyers of the 1999-2001 era got trapped in the borrow and spend cycle. The new high-flyers of 2002-03 are much more in the Receive and Spend mode, where most needed funds are provided by revenues and collection of receivables, and moderate-sized new-stock issues.

What do we learn from a bankrupcy? If we learn as we should, we learn to have a much larger "cushion" between our assets and liabilities.
The new high-flyers do not trust debt. They've seen those late 90's high-flyers become stagnant in their revenues and earnings from 2001 to the present, only now starting to break out.

Regarding Foolish Flow, I'm going to make a major post on that probably next weekend. I'll hold off on that, because I'm still preparing what I want to say.

Hope this helps,
Larry
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