Enronization

Even if you don't own any of their stock or any stock at all you will want to read this.

What Enron corporate officers did with their accounting firm is nothing new. It has been going on for years, but recently has become more egregious. Hiding facts from stockholders by showing Annual Reports with tiny footnotes has been happening for years. Even experienced accountants have trouble understanding what various financial statements mean. What chance does the little investor have? And that is the whole idea. The insiders don't want the outsiders to know what they are doing with the company money.

You have been told by your broker and by brokerage company advertising that you should do your research before you buy. You can research until you are blue in the face and still not know. For years I have been preaching that research is worthless.

You can go to nexus of all research companies ? Morningstar ? and still the report they give you will not tell you the whole true story. I have recently been told that Morningstar is about 6 months behind in the posting of their material. Maybe and maybe not, but it doesn't make any difference if the facts they are reporting are lies. This not to fault Morningstar as they are merely a conduit of information.

There should be a lot of good things happen as a result of the bankruptcy of Enron. The duplicity of Arthur Andersen is despicable. They were acting both as consultants and auditors. The consultants were telling the company what to do and how to get away with it and the auditors were rubber stamping their actions. It's like have the fox guard the hen house.

For some time the Securities and Exchange Commission (SEC) has been looking into recommendations by in-house analysts of brokerage firms who have made Initial Public Offerings. These analysts should keep their mouths shut. Can you imagine any analyst keeping his job if he should happen to tell the truth about a stock his company was pushing? Those beautiful full color reports from your broker belong in the wastebasket.

It is about time that the SEC cracks down on both these types of scams. And that is what they are. Anything to get the investor (you) to part with his money.

For the next year we are going to see more Enron-type accounting scandals. These will cause the investor to become very wary about what to buy so he won't buy anything. This will cause the stock market to be weak. Each time another one hits the fan there will be additional selling. The basic confidence of the investor has been shaken and it will be a long time before it returns.

I do sympathize with those who lost their money in Enron, but I do hope it will have the effect of activating some of the Washington beaurocrats to act to protect the millions who have not yet been victimized.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.

Copyright 2005

al@mutualfundstrategy.com; 1-888-345-7870

---

Never Fall In Love!

Recently I watched my favorite football team lose a vital... Read More

Your Job

There are so many kinds of work that needs to... Read More

The Stock Market Investor?s Worst Enemy

Every stock market investor faces one primal enemy. An enemy... Read More

Red, Green, Yellow - or - Stop, Go, Go Very Fast: Which Describes Your Online Trading?

Ever notice how behavior in one area of life can... Read More

Selection Vs Direction

As I have said many times before in this column... Read More

Historical Briefing: Stocks, Finance and Money

The World Bank claims that some two billion of the... Read More

The Cub; II

We keep hearing about this bear market and that the... Read More

Investment Lawyers and Trash Stocks

The trash business in its efforts to cook their books... Read More

Dont Lose All Your Money

That sounds like good advice doesn't it? Don't lose all... Read More

Different Ways of Buying Stocks

Let's say you are interested in this one company. You... Read More

Value Investing: Selecting From The Bargain Bin

Picking a beaten-down stock requires a different kind of selection... Read More

Analysts - Do They Really Know The Stock Market?

When you become interested in a stock or mutual fund... Read More

Who Knows?

The Shadow knows. Remember him? It seems a shadow has... Read More

Trading vs Investing

I often hear from people, "I don't trade. I invest.... Read More

The Right Mutual Funds For Baby Boomers

If you are a baby boomer, time is not on... Read More

Political Investing

We have two candidates for president that have really different... Read More

You Don?t HAVE To Be Trading

As a novice trader, you'll often feel the need to... Read More

Stock Trading Secrets?

How often have you come across an advertisement or e-mail... Read More

What Does it Take to be a Stock Trader?

It takes a total mental commitment to the task. It... Read More

Trading Baskets II: The Crapolio, A Roll of the Dice in the Stock Market

In a previously written article, we expanded the use of... Read More

The Surgeon General

The Surgeon General of the United States says that smoking... Read More

Again With the Bubbles?

A few years back ? it seems like an eternity... Read More

Defining a Long-Term Investment in the Stock Market

For some "long term" would mean holding a stock position... Read More

Price Targets

Every day in any financial publication you will find the... Read More

Investment Research - The Dalbar Study

Very few people, even professionals, have heard of the Dalbar... Read More

Stock Market Volatility

In my opinion, due to the volatility of stock market... Read More

Bargain Basement - Finding Stocks That Go Up

Have you been listening to the talking heads on CNBC-TV?... Read More

The Inside Scoop on Mutual Fund Rip Offs

The bear market that showed up at the end of... Read More

Dont Buy Worldcom! A Guide to Wise Bottom Fishing

Over the past few months, several investment professionals have brought... Read More

Expense Ratios

Mutual funds and brokers are always preaching not to buy... Read More

Stock and Fund Dividends

When is a dividend not a dividend?The latest thing "conservative"... Read More

What is a Trading Plan ? and Why You Need One?

How do you make money without picking tops and bottoms?I... Read More

Market Timing

Every broker and financial planner will tell you that you... Read More