A recent Wall Street Journal article reveals that 20% of CFOs of US publicly-trade companies purposefully manipulate their earnings:

“Last year, the academics asked 169 finance chiefs of public firms what percentage of companies, in their experience, use accounting ruses to report earnings that don’t fully reflect the companies’ underlying operations… The answer: around 20%.”

The focus of my research is on economic earnings, which removes the distortions created by accounting manipulation. The only way to get the whole truth on corporate profits is to diligently read and analyze the footnotes and MD&A sections of annual reports (10-K filings). I created New Constructs to do just that and have a patent on the System And Method for Reversing Accounting Distortion and Determining the True Value of a Business.

In today’s markets, investors deserve research they can trust. You cannot trust the companies or the banks that sell their stock to give you the truth. Few people even know how to find the truth. In the age of gigantic IPOs, mega mergers, ridiculous Wall Street pay and executive compensation, doing diligence lost its luster. Intelligent investors know that doing diligence is the only way to make sound investment decisions.

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