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How are These 19th Century Companies Doing Today?

Monday, July 7th, 2014 5416212814_0f9862728e_m

Trading stocks sometimes feels like a very modern phenomenon, so it’s easy to forget that some of the companies we’re investing in go back a century or more.

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Danger Zone: Value Investors

Tuesday, April 1st, 2014 7827785878_34859830a8_m

Check out this week’s Danger Zone Interview with Chuck Jaffe of Money Life and
Value investors are in the…

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Danger Zone: Momentum Investors and the Financial Sector

Tuesday, November 26th, 2013 DZ_Fig1

As regulators dole out punishments that fit the crimes, they are finally closing many of the illegal trading loopholes that have driven so much of Wall Street profits over the past decade.

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Pension Net Funded Status – Valuation Adjustment

Friday, August 16th, 2013 NewConstructs_netpensions

Companies with underfunded pensions will likely need to divert a greater amount of future cash flows away from shareholders to make up the funding gap. An accurate analysis of shareholder value should include the net funded status of pensions.

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Overfunded Pension Plan Assets – Invested Capital Adjustment

Monday, August 5th, 2013 OverfundedPensions

Overfunded pension assets are similar to excess cash, and should not be included in the calculation of return on invested capital (ROIC).

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Off-Balance Sheet Reserves – Invested Capital Adjustment

Wednesday, July 3rd, 2013 ICRES

Reported assets don’t tell the whole story of the capital invested in a business. Accounting rules provide numerous loopholes that companies can exploit to hide issues and obscure the true amount of capital invested in a business over its life.

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Change in Total Reserves – NOPAT Adjustment

Monday, June 17th, 2013 ReservesDelta

Reported earnings don’t tell the whole story of a company’s profits. They are based on accounting rules designed for debt investors, not equity investors, and are manipulated by companies to manage earnings. Only economic earnings provide a complete and unadulterated measure of profitability.

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Non-Operating Income Hidden in Operating Earnings – NOPAT Adjustment

Monday, June 17th, 2013 NewConstructs_NOPATadj_hiddenincome

Non-operating items in operating income are unusual gains that don’t appear on the income statement because they are bundled in other line items. Without careful footnotes research, investors would never know that these non-recurring income items distort GAAP numbers by artificially raising operating earnings.

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Non-Operating Expenses Hidden in Operating Earnings – NOPAT Adjustment

Wednesday, June 12th, 2013 ENOPTIO

Non-operating expenses are unusual charges that don’t appear on the income statement because they are bundled in other line items. Without careful footnotes research, investors would never know that these non-recurring expenses distort GAAP numbers by lowering operating earnings.

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How To Find the Best Sector ETFs

Monday, May 20th, 2013 BSRETFT

Finding the best ETFs is an increasingly difficult task as there are more and more to choose from every day.

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How To Find the Best Sector ETFs

Friday, November 30th, 2012 BestSectorETFs

Finding the best ETFs is an increasingly difficult task in a world where a new ETF seems to be born every 10 seconds.

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Best and Worst Funds: Financials Sector

Monday, February 6th, 2012 Financials1

The Financials sector ranks last out of the ten major sectors as detailed in our sector roadmap. It gets my Dangerous rating, which, like my fund ratings, is based on aggre­ga­tion of stock rat­ings for each of 563 companies in the sector. The Financials sector is the bottom of the sector barrel.

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Sector Roadmap For Best and Worst Funds

Tuesday, January 24th, 2012 SectorFigure13

For those investors interested in rigorous research, I offer my roadmap to the best stocks and funds in the market by sector. The full sector roadmap is here.

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Forensic Accounting Says Avoid Energy & Financial Stocks

Tuesday, November 15th, 2011 Figure1

As one financial scandal follows another, it seems the good guys are having a tougher time catching the bad guys. Recent revelations about MF Global’s ponzi scheme are another reminder of how our regulatory and oversight systems seem to let whales pass through their net.

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ETF Shoppers: Accounting Trickery At Its Worst In Financial Sector

Tuesday, October 18th, 2011 Figure2

There are 25 financial sector ETFs. Per Figure 1, these 25 ETFs have drastically different stock holdings and, therefore, allocations. The lowest number of holdings is 24 while the highest is 496.
For starters, investors interested in the financial sector cannot expect many good investment options given that the sector gets my “dangerous” rating and ranks ninth out of the ten sectors that make up the economy. Details are in our sector roadmap report.

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3Q11 Sector ETF Rankings: Chips and Dips Rise To The Top

Friday, July 15th, 2011 dreamstimefree_310726_upGraph

The consumer staples and information technology sectors are tops among the ten major sectors. Both get our “attractive” rating. Our Sector Roadmap report ranks and rates all of the 10 sectors. It also benchmarks all sectors against the S&P 500, which gets our “neutral” rating and the Russell 2000, which gets our “dangerous” rating.

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Sell Morgan Stanley Before It Sells You Down the River

Tuesday, May 3rd, 2011 SellMorganStanleyFigure1

When Morgan Stanley (MS) started in 1935, there were around fifteen employees. For 2010, the company reported 62,542 employees. Bigger is not always better. And for big, publicly-traded companies, big tends to be worse especially when it comes to financial reporting.

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