Have you noticed the same thing we have concerning the earnings lately? They are just jam packed with some of the screwiest accounting practices I've ever seen. How many companies did you see that beat their estimates on lowered revenues? A lot. If you are making less sales, then the only way to beat the estimates is by cutting costs or playing with the "charges".

I've seen more charges this time around than ever before too. A charge was designed to be an exclusion from an earnings report because of a "one time" event. In other words let's say you run a chain of shoe stores. During the quarter, a storm knocks down one of your buildings. So, you loose revenues and earnings from that outlet. Well, that would definitely qualify as a one time charge. It's not every day that a storm knocks your buildings down. Yet when you listen to any conference call lately, you hear reams and reams of baloney about this charge and that charge.

Then one night we saw this one: DJ TTM Tech 4Q On 31c/Shr Valuation Allowance Reversal. Now what on earth is that? I've been in this gam

e for quite a while and have seen just about every accounting trick in the book. Yet I've never heard of this one.

What's our point? The earnings that they are screaming about as being so great, really haven't been so great folks. They have pushed the Sarbanes Oxley rules to the absolute maximum, and one time charges have become something like creative license. When earnings are up on reduced revenues, it should raise a red flag to question "how'd they do that?" If you can't find it easily, be careful with the stock.

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