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Are Company’s Profit Reports “Phony?”

SmartStops Comment:  This is why you always need a smart objective third party managing the risk of your investments.

as reported by the AP:

Those record profits that companies are reporting may not be all they’re cracked up to be.

As the stock market climbs ever higher, professional investors are warning that companies are presenting misleading versions of their results that ignore a wide variety of normal costs of running a business to make it seem like they’re doing better than they really are.

What’s worse, the financial analysts who are supposed to fight corporate spin are often playing along. Instead of challenging the companies, they’re largely passing along the rosy numbers in reports recommending stocks to investors.

“Companies are tilting the results,” says fund manager Tom Brown of Second Curve Capital, “and the analysts are buying it.”

Source:  http://abcnews.go.com/Business/wireStory/experts-worry-phony-numbers-misleading-investors-31605334

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