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Strategies & Market Trends : Value Investing
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To: Michael Burry who wrote (7409)6/6/1999 1:53:00 PM
From: Paul Senior  Read Replies (1) of 78659
 
re: accounting/financial prof's and making money in the stock market

I never can come to a good conclusion on this stuff.

If accounting professors are expert at financial warnings and this is important, then categorically these folks should have an overwhelming advantage over the rest of us who are ignorant. So why aren't they rich from stock market investing? Or maybe at least a few are. (Graham/Whitman??) Seems to me, when there's a company blowup, people -- especially professors -g- -- go back and look at the financial statements, and say, "yes, it was obvious if only anybody (who knew anything about financial statement analysis) looked". But just prior to the blowup, one probably saw plenty of buy recommendations on the stock from analysts.

If expertise in financial accounting is profitable and important or necessary for investment success, why aren't these guys managing funds rather than teaching MBAs in ivory towers? (Again, maybe they are. And I may be confusing accounting and finance expertise here.)

My own proclivity is to assume that some stocks suffer from misleading or illegal accounting. Rather than spend eons combing through each potential and actual purchase, I'll play the diversity game and just assume 10% of my positions will bite me because of financial items that could have been detected but were not.
And I do have my 10% :>(
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