What We’re Reading This Morning — February 26, 2015

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What’s behind JPMorgan’s plan to boost earnings?

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David Trainer Explains Why Big Banks Are No Longer an Attractive Investment

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David Trainer discusses why big banks are no longer an attractive investment.

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What We’re Reading This Morning — January 15, 2015

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What does the Swiss franc action mean for U.S. stocks?

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What We’re Reading This Morning — November 7, 2014

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Buyer, beware: Investor sentiment is unusually high

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What We’re Reading This Morning — October 14, 2014

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What does breaking the S&P 200-day moving average really mean?

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What We’re Reading This Morning — October 1, 2014

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What’s going on with the activists in Yahoo?

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How are These 19th Century Companies Doing Today?

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Trading stocks sometimes feels like a very modern phenomenon, so it’s easy to forget that some of the companies we’re investing in go back a century or more.

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Danger Zone: Value Investors

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Danger Zone: Momentum Investors and the Financial Sector

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As regulators dole out punishments that fit the crimes, they are finally closing many of the illegal trading loopholes that have driven so much of Wall Street profits over the past decade.

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Pension Net Funded Status – Valuation Adjustment

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Companies with underfunded pensions will likely need to divert a greater amount of future cash flows away from shareholders to make up the funding gap. An accurate analysis of shareholder value should include the net funded status of pensions.

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Overfunded Pension Plan Assets – Invested Capital Adjustment

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Overfunded pension assets are similar to excess cash, and should not be included in the calculation of return on invested capital (ROIC).

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Off-Balance Sheet Reserves – Invested Capital Adjustment

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Reported assets don’t tell the whole story of the capital invested in a business. Accounting rules provide numerous loopholes that companies can exploit to hide issues and obscure the true amount of capital invested in a business over its life.

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Change in Total Reserves – NOPAT Adjustment

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Reported earnings don’t tell the whole story of a company’s profits. They are based on accounting rules designed for debt investors, not equity investors, and are manipulated by companies to manage earnings. Only economic earnings provide a complete and unadulterated measure of profitability.

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Non-Operating Income Hidden in Operating Earnings – NOPAT Adjustment

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Non-operating items in operating income are unusual gains that don’t appear on the income statement because they are bundled in other line items. Without careful footnotes research, investors would never know that these non-recurring income items distort GAAP numbers by artificially raising operating earnings.

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Non-Operating Expenses Hidden in Operating Earnings – NOPAT Adjustment

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Non-operating expenses are unusual charges that don’t appear on the income statement because they are bundled in other line items. Without careful footnotes research, investors would never know that these non-recurring expenses distort GAAP numbers by lowering operating earnings.

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How To Find the Best Sector ETFs

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Finding the best ETFs is an increasingly difficult task as there are more and more to choose from every day.

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How To Find the Best Sector ETFs

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Finding the best ETFs is an increasingly difficult task in a world where a new ETF seems to be born every 10 seconds.

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Best and Worst Funds: Financials Sector

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The Financials sector ranks last out of the ten major sectors as detailed in our sector roadmap. It gets my Dangerous rating, which, like my fund ratings, is based on aggre­ga­tion of stock rat­ings for each of 563 companies in the sector. The Financials sector is the bottom of the sector barrel.

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Sector Roadmap For Best and Worst Funds

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For those investors interested in rigorous research, I offer my roadmap to the best stocks and funds in the market by sector. The full sector roadmap is here.

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Forensic Accounting Says Avoid Energy & Financial Stocks

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As one financial scandal follows another, it seems the good guys are having a tougher time catching the bad guys. Recent revelations about MF Global’s ponzi scheme are another reminder of how our regulatory and oversight systems seem to let whales pass through their net.

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