Sarissa Resources Inc (SRSR)

[downsideup]

I disagree with that, at least as far as the DD on Enron goes.

It is simply a fact that not all businesses succeed in what they are trying to do, and a fact that doing the DD may not always show you the factors that will prove in time to be what causes the business to fail. Most that fail probably do fail because they didn't properly anticipate some things that proved to matter a lot... and your purpose in DD is finding what those things are to anticipate them in your own estimates, while grading the management on how it seems they are doing. Your DD is a report card on management, first...

Enron, though, wasn't a difficult problem. About a year before Enron fell apart, I happened to be looking for funding for a project I was working on. Attorneys suggested talking to Enron, since they were spinning out a lot of cash and were busy funding a lot of things they didn't know squat about. Red flag. Took me about 30 minutes of looking to determine it wasn't anything I wanted to have anything to do with. Didn't call Enron. Fired the attorneys. That was about a year before the problems became public.

The moral of that story is that doing the DD doesn't mean looking at Yahoo to see what is reported there, or reading the filings and nodding your head... rather than analyzing the business the way you would if you were starting or buying the company... which you are when you invest. The rest, of course, fits in with that perspective I noted yesterday, that most of the people in the market aren't doing their homework, since it is work... and Enron is a perfect case in point.