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December 28, 2009


Edith Orenstein

From relevance to specific standards, to impact on Big Picture standard-setting, I think your rant is worthwhile and highly topical reading, in that using 'analysts' as a proxy for the common 'investor' or 'user' is not a slam dunk, for the reasons you cite. Other challenges in use of such a proxy include judging 'understandability' of a particular standard and its output, and judging different points of view on what information is 'relevant' and 'reliable' and the tradeoffs therein.

David Merkel

Careful, Tom. If you mention OSTK to prominently, you get on the "Sith Lord helpers list." ;)

Good post, and a helpful reminder to investors like me.

Independent Accountant

TS, my comments on your rant:
5. Absolutely. Any company which knocks out 20-25% a year increases in earnings, sales, EPS, etc., five or more years in a row, goes to the top of the "possibly cooked books list".
4. Agreed, except for the critical accounting summaries. I think they should be eliminated. If you want to read accounting policies, go to the footnotes.
3. Agreed. For decades I have believed GE's financials were works of fiction.
3. Agreed. (Three twice?.
2. I still remember Charlie Bludhorn. Lots of mergers are a big red flag.
1. Here I am cautious. Anything can spur an SEC investigation, including the SEC's looking to divert attention from some other entity. Really. Where are the SEC investigations of: Citigroup, AIG, Goldman, etc.? I won't hold my breath.

Good show

Tony Frank

Excellent article! Many more similar articles are urgently needed. The average investor is clueless when it comes to accounting issues and based on current trends, the need will continue to grow exponentially.

In contrast to prior years, foreign investors have grown more concerned about our accounting standards and their application than the other way around as was previously the case.

online Forex trading

Great article! I am not a fan of vastly growing "at any cost" companies myself. Thank you for these Red Flags - they are all very interesting and might be very relevant in different situations. I would love to copy and keep them for future references if you don't mind.

JS Mackie

Personally I do not think it to be a rant at all, but rather a very very valid and insightful input - what is the real problem? Too used to following rules that input is lacking?

With respect to the red flags, these too are indeed the source of consternation and certainly need to be addressed, but how would one go about it?

Skye @ operational restructuring

I am one of the people who is afraid of the company who focus their attention on their earning instead of performance. It is really dangerous to be on that team. This is red flag is really true.

My idea for this is they are more likely to fall. Though, their intention is grow, they are pulling their company down.

Tony Smith

Great read! Thanks for the red flags. This would be a useful resource of relevant information for certain situations.

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