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Investing experts John Del Vecchio and Tom Jacobs mix a potent combination of earnings quality analysis, long-side investing, and short-side portfolio risk management to help you create a long-short portfolio with less volatility and greater returns, while avoiding landmine stocks that will blow a hole in your financial security.
First, the authors explain the practical side of financial analysis. They demystify widely held assumptions about stock performance, expected returns, earnings quality, and short sellers. Then they comb the financial statements to find the places where companies hide poor earnings quality. Finally, they provide the value and special situations investing to pair with the short-side thinking and offer a tactical manual for applying what you've learned in the technical, day-to-day world of portfolio management.
Armed with this wealth-saving guide, you can confidently trade based on clear data-not the aggressive accounting tactics companies use to make their numbers look better than they are. Better still, it helps you start protecting yourself right away with:
Rules for finding companies playing with-rather than by-the numbers
Repeatable methods for uncovering what companies don't tell you about their numbers
Multistep approach to deciding when to sell a stock and when to short sell it
Reliable formulas for determining when a stock will get hit
The next time a company goes south, you can be the successful investor who knew What's Behind the Numbers?
Customer ReviewsMost Helpful
By NOLA909 on 05-28-14
A CPA rates this book 5-stars
Let's face it - this is not light reading. There is no romance involved nor is there a murder mystery to be solved. And the future of the planet is not threatened by the theories presented.
But - and you knew there was a 'but' - the book contains a heavy dose of lying, cheating, swindling and stealing --------- and it's all legal. Yes, this book details the ways accounting statements may be manipulated by companies to present the very best picture of its financial state to the investing public.
If a company's sales are lagging - why not reduce the inventory's selling price and sweeten the payment terms? There's nothing illegal in these actions - and company sales may well jump on these incentives. But longer term, these sales prices might have to be repeated over and over again to move stale inventory - reducing operating margins. And the sweetened payment terms might be too sweet - leading to an increase in bad debt expense. This downward spiral of decreased profitability may take a few quarters to show up to Wall Street, but inevitably the company's stock price will match the decline in the company's results.
What can an investor do to avoid such a situation? How can an investor pick up on the early signs of such troubles? Del Vechio and Jacobs have the answer! Their methods of analysis of financial statements often can spot financial problems before a company's stock price tanks.
All-in-all, the book very competently reviews the places where a company might - legally - manipulate revenues, expenses, allowances or cash flow in their financial statements. This book is in the best tradition of analyzing financial statements - following in the tradition of works by O'Glove on the "Quality of Earnings", for example.
The book's narration is done by one of the authors - Tom Jacobs - so the listener never feels that the narrator is 'just reading words' without any idea of what they mean. While I can't describe the narration as "lively" (as this book essentially is an accounting textbook), the pace and style of the narrator is pleasing.
In summary, this book is directed toward those with a good knowledge of accounting statements and of the stock market. However, beginning investors also could benefit from this book if they would only pick up one or two pointers on financial statement analysis.
As a CPA focusing on investments, I enjoyed the book -- and on many occasions as I listened to its chapters I found myself putting down my headphones and saying to myself "now - let's analyze my stocks from this same perspective...."
8 of 8 people found this review helpful
By Philo on 02-09-15
Sharpen your pencil, and your thinking
This is great value all the way through. With some limited accounting background, I am able to follow it on my walks without reference to the downloaded charts and graphs, though these are clear and helpful. And this is a walk all around the hidden soft spots in company financials. These metrics are easy to calculate and straightforward to apply. And plenty of the statements are hedged (in a good way) to help from oversimplifying things. Little capsule company histories side-by-side with where the numbers went, help to back up these useful tools. I plan to listen again to internalize all of it.
5 of 5 people found this review helpful