{"id":9545,"date":"2010-05-05T16:29:08","date_gmt":"2010-05-05T16:29:08","guid":{"rendered":"http:\/\/www.patheos.com\/blogs\/drishtikone\/2010\/05\/advise-financial-advisors\/"},"modified":"2010-05-05T16:29:08","modified_gmt":"2010-05-05T16:29:08","slug":"advise-financial-advisors","status":"publish","type":"post","link":"https:\/\/www.patheos.com\/blogs\/drishtikone\/2010\/05\/advise-financial-advisors\/","title":{"rendered":"Advise for financial advisors"},"content":{"rendered":"\n<\/head>

Investing and financial advisory is so tough that most don\u2019t get it right. Any help we can get from various quarters is useful. Here is a very good \u2013 and succinct \u2013 list of things that EVERY financial advisor and investor should remember. It is from an interview<\/a> by Charles Kirk with Herb Greenberg.<\/p>\n

\n
    \n
  1. THE NUMBERS DON\u2019T LIE.<\/b> They can be stir-fried, oven-fried or convection baked, but in the end they always hold the keys to the kingdom.<\/li>\n
  2. QUALITY, NOT QUANTITY. <\/b>Ignore the \u201cbeat the Street\u201d headlines on earnings. It\u2019s what goes into the earnings that counts.<\/li>\n
  3. GAAP ISN\u2019T THE SAME AS THE GOOD HOUSEKEEPING SEAL.<\/b> Generally Accepted Accounting Principles, according to which all financial statements are supposed to be prepared, include plenty of gray areas that give management enough rope to hang itself.<\/li>\n
  4. DON\u2019T CONFUSE STOCKS AND COMPANIES. <\/b>They sometimes go in opposite directions. The numbers may not lie, but stocks sometimes do.<\/li>\n
  5. RISK ISN\u2019T A FOUR-LETTER WORD.<\/b> A good rule of thumb is that before you buy, instead of asking how much you can make, first ask how much you can lose. That is what the smart guys do.<\/li>\n<\/ol>\n<\/blockquote>\n

    GAAP, although not paid much attention by the investors, is very important in the final analysis.. specifically in context of how companies use (or misuse it). Greenberg\u2019s advise on that front is also pretty impeccable:<\/p>\n

    GAAP is a big gray area. Virtually everything is subject to interpretation. I\u2019ve learned that some managements are more conservative than others. Best thing is to compare the way companies and their peers in the same industries treat the same kind of accounts. Beware of companies that have no true public peers. They can account for anything any way they want and there was no way to tell whether they are being conservative or aggressive. And beware of companies that always seem to be changing the way they report certain metrics, especially if they have no apples-to-apples peers. Can\u2019t wait until International accounting standards take effect. They will make GAAP look stringent. <\/p><\/blockquote>\n<\/body><\/html>\n","protected":false},"excerpt":{"rendered":"

    Investing and financial advisory is so tough that most don’t get it right. Any help we can get from various quarters is useful.<\/p>\n","protected":false},"author":1517,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22,61],"tags":[],"class_list":["post-9545","post","type-post","status-publish","format-standard","hentry","category-finance","category-regular_blog_post"],"yoast_head":"\nAdvise for financial advisors<\/title>\n<meta name=\"description\" content=\"Investing and financial advisory is so tough that most don't get it right. 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