For some companies to say that they are profitable, that means that they are taking more money in then they are paying out. If you look at the balance sheets for some firms, you will see that a lot of actual income is from conversion of currencies, one time collections of income just as the converse is true. Some companies show losses because of one time write-offs. While I respect the fact that some firms are not hiring more people because of the climate of financial uncertainty, I also wouldn’t listen to others who say how great things are – unless they are selling seeds, ammunition, firearms or life sustaining medicine.
The point of this brief post is to not always to ride the momentum of stocks like a day trader but to really look at what is going on behind the scenes. You may not want to be in a stock for the long haul but the chances are you might wake up and find that your shares are opening a lot lower from something you might have seen on a balance sheet months ago that is finally biting the company in the butt.
Hope you all had a nice 4th. Be safe. It is starting to warm up here in the southland.
Companies profitability in some cases is an illusion