Spot Financial Shenanigans: Easy Steps To Fraud Detection For Individual Investors (English Edition)

SPOT Financial Shenanigans

This Book Is Designed For Novice Individual Investors Who want invest successfully in public companies but want to learn to mitigate risks
If you, as individual investors, want to preserve your wealth you need to separate junk companies from solid ones. You need to look at a company as a whole, and not concentrate only on one of its aspects. You cannot expect to make an informed judgment while looking one aspect of a company. Some of you will concentrate on analyzing the financial numbers disregarding pertinent company’s press releases that can influence these numbers, or statements that are in the financial reports. Some of you will decide that PE (Share Price to Earning) and income are the only numbers you need to decide if a company is a good investment.
What many of you miss, professional investors look at a prospective investment from very angle to ensure that they don’t get blind spotted. They look at the numbers you look at, but also at anything that may contradict the number, insignificant it may be. They know accounting is far from being a science like Math or Physics, but a field where subjective judgments play a role on how the numbers are calculated or presented. In fact, some factors like accounting practices, press releases, CEO statements and actions, lawsuits, and the number of clients can have a considerable influence on the company bottom line.
While you as individual investors cannot replicate some due diligences performed by professional investors, such as going to companies directly and checking their investment, you can mitigate 95% of the risk of investing in a company that uses financial shenanigans to lure you like a lamb.

What You Will Learn In This Book?

Spotting Financial Shenanigans requires mostly knowing how to read between the lines. Press Releases, and news contains the smoke, while Financial Reports contain the fire
•A press release can provide more info about a company health than you think.
•A PE has little value without additional context. I should know, during the Tech Bubble, TV Financial Personality and their guests were explaining why a PE of 100 was the new norm, and why we should by more and more.
•A CEO action or inaction can also provide red flags to invest or not. Peter Lynch, the great investors in the 90’s, stated that the flashiness of CEO discouraged him from investing.
•Auditors’ opinion and footnotes contain more useful hints about financial warnings than you may believe.
•Cash is king, even for companies.
•Get a company fair value.

Why I Wrote the Book on Financial Warnings for Individual Investors?

Wall Street and Professional Investors, for good reasons, have no incentive to inform individual investors about the financial risks related to fraud or shenanigans. They know that the last one that keep the hot potato is the one to lose.
From all the work I have done in the last 15 years in equity market, and from my interest in reading investment books for professional investors, and individual investors, I noticed that individual investors are rarely told about the real risks with investing in public companies. Individual investors assume wrongly that SEC, financial TV programs, and financial newspapers are looking after their interest, that all the regulations out there deter unethical or criminal behaviors. Unfortunately, when a lot of money is at stake, wrong doers will always find a way to sub convene the law, and deceive others.