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Author: henrypeter Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 459  
Subject: Re: Dividend Cut Commentary Date: 6/28/2006 8:31 PM
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That's an interesting read. The sad thing is that I bought this stock based on the Income Investor newsletter that said it was a great high-yield stock to balance some of the other stuff (mostly Hidden Gems) in your portfolio. With the possibility of a dividend cut, not to mention a 40% drop in value, I'm wondering whether we've hit bottom yet or if splitting the company will release some sort of value that isn't visible in the combined company.

easmith,

I am in the same boat as you are. I am not prepared to sell, under any conditions because it will not go bankrupt, and at least there will be some sort of dividend which is better than nothing. In several years, perhaps most of the capital loss of your and my investments may be recovered, but I expect it will take a long, long time.

Meanwhile, anything that is being said here, imo, by II or analysts, is just sugar coating a very ugly situation, which is likely to get more ugly before this thing has any hope of inching up. It may be a good buy for newcomers buying in at the yet to come bottom, but for many it is a nasty deal that won't go away.

Newsletters and analysts like to sugarcoat their mistakes. The lesson, imo, to be learned here is that don't trust rosey stories of newsletters. They are eager to offer subscribers glowing opportunities (with the caveat that the market is risky), but in their eagerness to offer a glowing story, too often the glowing stories of opportunity looks mostly on the rosey side of the opportunity, but does not kick the tires hard enough and turn over all the possible stones. The loser is the subscriber. It happens all the time. Imo, the risks are often laying around for all to see, if the researcher wants to include them in a properly balanced recommendation. But, that would ruin the rosey story, and also require more work than the researcher is willing to do for their eager and trusting subscribers who do not have access to the same level of info that the newsletter should be having.

Recently, a newsletter I get, gave an urgent sell e-mail for a stock, that fortunately I was not in. But the story is typical of newsletter recklessness. The stock was a major pharmaceutical that had one of its major patents running out. Thus, the expectation was that the generic pharmas would pick it up, and take income away. This was enough of an event that months ago the stock should have been pulled from the newsletter list. But, instead, when the patent was about to end, another major pharma announced it would also start selling the drug as a generic. This was bad news indeed, and the stock plunged. For subscribers who pay to be protected from unncessary risk, the newsletter had let them down, because the newsletter preferred to retain their rosey story, and place the subscribers at risk until it was too late.

Henry
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