Re: [CANSLIM] Validity of Earnings Reports

From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] Validity of Earnings Reports
Date: Sun, 14 Apr 2002 21:11:41 -0400

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Ira, I don't think you can protect yourself from a company that is =
deliberately falsifying their financials, or using creative accounting =
to cover up real issues.

you would have to not only have an accounting degree, but go in and do =
an independent audit, which is not practical.

Best you can do is look for consistency (and inconsistencies) in the 10Q =
and 10K reports. Read Management's discussion. Question or dig deeper =
into anything that doesn't make logical sense. Look for any changes in =
accounting procedures from prior periods.

Even before Enron, I preferred stocks showing consistent top and bottom =
line growth both sequentially and year to year. Now, that is even more =
important to me. If they are fudging, at least they are doing it =
consistently.

Tom Worley
stkguru@bellsouth.net
AIM: TexWorley
- ----- Original Message -----=20
From: Ira Post=20
To: canslim@lists.xmission.com=20
Sent: Sunday, April 14, 2002 9:06 PM
Subject: [CANSLIM] Validity of Earnings Reports


This has become a huge issue in the last year.  I'm bringing it up to =
this list because earnings growth is such an important part of CANSLIM.  =
What do you do to protect yourselves from companies that fudge their =
real earnings?

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<DIV><FONT face=3DArial>Ira, I don't think you can protect yourself from =
a company=20
that is deliberately falsifying their financials, or using creative =
accounting=20
to cover up real issues.</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>you would have to not only have an accounting =
degree, but=20
go in and do an independent audit, which is not practical.</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>Best you can do is look for consistency (and=20
inconsistencies) in the 10Q and 10K reports. Read Management's =
discussion.=20
Question or dig deeper into anything that doesn't make logical sense. =
Look for=20
any changes in accounting procedures from prior periods.</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial>Even before Enron, I preferred stocks showing =
consistent=20
top and bottom line growth both sequentially and year to year. Now, that =
is even=20
more important to me. If they are fudging, at least they are doing it=20
consistently.</FONT></DIV>
<DIV><FONT face=3DArial></FONT>&nbsp;</DIV>
<DIV>Tom Worley<BR><A=20
href=3D"mailto:stkguru@bellsouth.net">stkguru@bellsouth.net</A><BR>AIM:=20
TexWorley</DIV>
<DIV style=3D"FONT: 10pt arial">----- Original Message -----=20
<DIV style=3D"BACKGROUND: #e4e4e4; font-color: black"><B>From:</B> <A=20
title=3Dip108@yahoo.com href=3D"mailto:ip108@yahoo.com">Ira Post</A> =
</DIV>
<DIV><B>To:</B> <A title=3Dcanslim@lists.xmission.com=20
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
 </DIV>
<DIV><B>Sent:</B> Sunday, April 14, 2002 9:06 PM</DIV>
<DIV><B>Subject:</B> [CANSLIM] Validity of Earnings Reports</DIV></DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial size=3D2>This has become a huge issue in the =
last=20
year.&nbsp; I'm bringing it up to this list because earnings growth is =
such an=20
important part of CANSLIM.&nbsp; What do you do to protect yourselves =
from=20
companies that fudge their real earnings?</FONT></DIV></BODY></HTML>

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