Decoding Propaganda – Hidden Gems and Red Flags in the Stock Market

Category Archives: Decoding Propaganda

Provide readers with the truth behind the numbers, news and other communications that come from Corporate America and the big Wall Street Firms.

The High-Low Fallacy: Don’t Believe the Merger Hype

August 31, 2012 – 2:09 pm

One of the biggest misconceptions in the investing world is that the merit of an acquisition should be judged by whether or not it is “earnings accretive”. The impact of an acquisition on a company’s accounting earnings is not indicative of its economic value to shareholders.

By David Trainer | Also posted in Investing 101 | Tagged Credit Suisse First Boston, Frontiers of Finance, Michael Mauboussin, “Let’s Make a Deal” | Comments (1)

The Importance of Expectations – The Question that Bears Repeating: What’s Priced In?

August 27, 2012 – 12:21 pm

As detailed in “How To Make Money Picking Stocks”, quantifying the future cash flow expectations embedded in stock prices is critical to making an informed investment decision.

My mentor, Michael Mauboussin, in his latest piece: ” The Importance of Expectations – The Question that Bears Repeating: What’s Priced In?” explains more eloquently than I that the key to successful investing is to systematically distinguish between price and value – two very distinct concepts.

By David Trainer | Tagged expectations investing, Legg Mason Capital Management, Michael Mauboussin | Comments (0)

footnoted.org vs New Constructs = Hype vs Substance

March 1, 2012 – 3:05 pm

When I ran across the recent article “270,033 pages later, a chance to catch our breath…”, I could not help but admire footnoted.org’s marketing moxy.
The article provides a count of the number of pages of 10-K filings that have poured in during the real earnings season. It also highlight a couple of the largest filings. At first glance, it is easy for one to assume that all of the 270,033 pages were also analyzed.

By David Trainer | Tagged C, Citigroup, Eastman Kodak, Eli Lilly, Financial Footnotes, footnoted.org, INTC, Intel, Lam Research, LLY, LO, Lorillard, LRCX, Morgan Stanley, MS, PFG, Principal Financial Group, The Real Earnings Season, VHC, VirnetX Holdings, Wal-Mart, WMT, Zumiez, ZUMZ | Comments (0)

Wall $treet Week Returns: New Constructs’ Unique Research and Very Attractive Rating for AAPL

March 1, 2012 – 10:12 am

My interview with Wall $treet Week focuses on the uniquely rigorous research of New Constructs and three of our top stock picks.

By David Trainer | Also posted in Stock Picks and Pans | Tagged AAPL, Apple, BAC, Bank of America, Wall Street Week | Comments (0)

Fox Business News: “The Real Earnings Season”

February 17, 2012 – 12:28 pm

Fox Business News features my focus on the Real Earnings Season that is overlooked by most everyone in the market.

By David Trainer | Tagged 10-K filing, annual report, detailed analysis, Financial Footnotes, New Constructs | Comments (0)

The Real Earnings Season Begins Now

February 17, 2012 – 9:43 am

Nearly all of the investing world ignores 10-K season. 10-Ks contain the most important financial information that companies provide all year.

By David Trainer | Also posted in Stock Picks and Pans | Tagged 10-K, American Airlines, annual report, C, Citigroup, Eastman Kodak, Financial Footnotes, Inetl, INTC, Lam Research, LLY, LO, Lorillard, LRCX, Morgan Stanley, MS, PFG, Principal Financial Group, VHC, VirnetX Holdings, Wal-Mart, Wlu Lilly, WMT, Zumiez, ZUMZ | Comments (4)

The Leak on WikiLeaks – Regulators Knew About Risks That Led to Financial Fallout

December 2, 2010 – 11:20 am

While I cannot predict what WikiLeaks will leak about some major banks, I have a hunch that one of the revelations might be from a special New Constructs report provided to the Senate Banking Committee’s Subcommittee on Securities, Insurance, and Investment.

By David Trainer | Also posted in General Market Comments | Tagged AIG, American International Group, BAC, Bank of America, CDS, credit default swap, derivatives, Financial Footnotes, Financial Regulatory Reform, Financial Sector, Senate Banking Committee, Subcommittee on Securities Insurance and Investment, WikiLeaks | Comments (1)

Wall Street’s Secret Plans To Continue Raiding the Capital Markets

October 27, 2010 – 1:05 pm

In another excellent expose “Wall Street Proprietary Trading Under Cover”, Michael Lewis exposes Wall Street’s plan to exploit loopholes in the laws and regs to continue proprietary trading, the activity that was the primary downfall of Bear Stearns and Lehman Brothers.

By David Trainer | Also posted in Financial Reg Reform, General Market Comments | Tagged corporate profits, regulatory reform, speculation, transparency, Wall Street | Comments (0)

Wall Street Research Cannot Be Trusted – Proof Point

August 11, 2010 – 1:58 pm

In case you needed proof beyond the Global Research Settlement that Wall Street research cannot be trusted, Morgan Stanley delivers by admitting “inadequately disclosing conflicts of interest on the part of its research analysts.”

By David Trainer | Tagged conflict of interest, conflicts, investing, investment decision, propaganda, regulators, regulatory reform, research, SEC, stocks, Wall Street | Comments (0)

Economic Versus Accounting Earnings

August 5, 2010 – 8:35 am

Accounting data was not designed for equity investors, but for debt investors. “Earnings, earnings per share and earnings growth are misleading measures of corporate performance.”(from page 66 in The Quest For Value by Bennett Stewart, Harper Collins 1991.)

By David Trainer | Also posted in Investing 101 | Tagged accounting earnings, cash flow, corporate profits, dynamic discounted cash flow model, earnings, economic earnings, footnotes, GAAP, Invested Capital, NOPAT, propaganda, transparency | Comments (37)

Stock Pick of the Week
Sell Apple (AAPL)
Apple's 270% return on invested capital (ROIC) is not sustainable. With no groundbreaking innovation on the horizon, Apple's ROIC, and its stock price, should decline to a level closer to its competitors.
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From New Constructs

Proof Is In Performance: Jan 2005 - Mar 2013
	Since Inception	2013 YTD
Most Attractive	80%	5%
Most Dangerous	-42%	-8%
Most Attractive/Dangerous	56%	-3%
S&P 500	32%	6%

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