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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Graham Osborn who wrote (59835)	9/18/2017 7:15:25 PM
From: Graham Osborn	Respond to of 78748

One thing I add to this that maybe others can learn from - I realize that up until now I've analyzed long and short ideas (I no longer short) differently. For a long idea, I started with the premise that management was honest and I could believe the numbers. For a short idea, I started with the premise that management was dishonest and I couldn't believe the numbers. Those two premises lead you down very different paths. For the long path I would look at statistical ratios, then articles focusing on the qualitative, and then the filings, and then website/ customer reviews/ earnings calls/ etc. For the long path I would basically look for whatever dirt was already available (bearish articles, interviews with management, Youtube videos, corporate website), then work through a version of Schilit's checklist in Financial Shenanigans. The forensic approach takes a lot longer since you have to question everything. Having invested in my first fraud (I've shorted many), I realize that what I really need to do is use both approaches for every long idea. In other words, analyze the company as a long - but then go back and restart with the assumption that the company is a fraud. I think that could have helped me in this case because I would have questioned how active their Ubiquiti Community website was, or where their distributors were domiciled, or other stuff like that.