Last week, our analysts parsed 700 filings and collected 102,289 data points. In total, they made 17,454 adjustments with a dollar value of $6.1 trillion. Analyst Allen L. Jackson found a few items in US Steel’s (X) 10-K that caused us to downgrade the stock from Dangerous to Very Dangerous.
Check out my latest Danger Zone interview with Chuck Jaffe of MarketWatch.com.
The impact on valuation: instead of a fair value in the mid $50s, I now see it in the low $40s – about 30% lower than where the stock is today. 30% dwarfs the 4% dividend yield.
As I wrote in “Don’t Be Fooled: Get Short Now”, the euro is not that different from Enron, WorldCom or the Madoff fund. All of these organizations were able to pretend they were profitable or solvent long after they were insolvent.
Now markets are finally acknowledging the intractability of the Euro debacle.
Some stocks are more dangerous than others. In an anemic economic environment, the most dangerous stocks are those with issues that are lurking behind the scenes or in footnotes.
Listen in on my 15 minute interview describing the rigorous diligence New Constructs applies to every rating on the stocks, ETFs and mutual funds we cover.