Thu, 05 Jul 2007 15:27:20 GMT

Detecting fraud

What are the main characteristics of companies that engage in fraud? What are the tell-tale signs?

A new study reveals that price-earnings ratios and market-to-book ratios are unusually high prior to the fiddling of the books. Also, firms that engage in this sort of activity have had unusually strong stock price performance in the years prior to the misdeeds. So you don't really see it coming.

According to the study, Predicting Material Accounting Manipulations, another telltale sign was the amount of new financing as the company scrambled to get more cash. Indeed, cash from financing more than doubles in the manipulating years. Also, accounting rates of return are declining, earnings growth rates are negative and cash margins are tightening around the time they embark on their shenanigans.

The researchers behind the study, Patricia M Deschow from the Haas School of Business, Weili Ge from University of Washington Business School, Chad R Larson from University of Michigan's Stephen Ross School of Business and Richard G Sloan from Barclays Global Investors, also found that larger firms were relatively more likely to misstate earnings. They found that 15.3 per cent of the manipulations occurred in the largest 10 per cent of firms. Why is that? For a start, they are under more scrutiny from the media and analysts, which means problems are more likely to get attention. Second, they are more complex, consisting of many separate reporting units. As a result, managers can manipulate the numbers more easily, with less likelihood of audit detection. And finally, the Securities and Exchange Commission has limited resources and so may see better cost benefits focusing its limited enforcement budget on relatively large firms.

The study, which identified 680 unique firms misstating at least one of their quarterly or annual financial statements, found that the biggest trick was to play tricks with how much they booked in as revenue. That occurred in 55 per cent of cases. Manipulations of reserves occurred in 10 per cent of the samples, and manipulations of inventory and costs of goods sold occurred in 25 per cent of cases.

And which industries had the biggest offenders? Watch out for Computer and computer services, retail and general services such as healthcare and telecommunications.

This study won't stop fraud. But at the very least, it gives us some idea of what to look out for. Posted by: leon      Read more     Source

Thu, 05 Jul 2007 08:17:15 GMT

The Price of Independence

Here in the States, it's Independence Day. The day we celebrate our victory over England in the Revolutionary War, and became a democratic republic.

While you're indulging in your grilled delights, don't forget to take a moment to honor the brave men and women who give themselves to that cause every day. They really do sacrifice a great deal - and you just can't see it until you are personal friends, or otherwise very close, with the people who serve our country.

Just as an example, the divorce rate in the Navy, overall, is over 80%. Submariners have a 92% divorce rate. Being in the service is extremely difficult on a marriage. Just imagine what it does to the rest of their personal life.

Not to mention - they are literally risking their life.

Personally, I'm against the war, but I'm all for our troops. They need to know they are appreciated, missed, and supported. It's a hard job, and they chose to do it - but that doesn't mean they may not hate themselves for that choice every day.

Some love that life, but others definitely deeply regret how they must compromise their morals, ethics, and personal goals. Just showing how much you appreciate, miss, and support their choice, helps them to get through the next day. Posted by: Miche      Read more     Source

Tue, 03 Jul 2007 20:58:43 GMT

Have Prince William and Kate Patched Up?

Prince William and Kate Middleton, who had fallen apart in April after four years of togetherness, went great lengths to conceal their tryst on the eve of Diana concert.


William is rumored to be once again close to Kate as he invited her with family to sit in the royal box for the Wembley spectacular dedicated to his late mother - princess Diana. Middleton looked stunning in a white coat dress and high boots.

Although the couple tried to avoid unnecessary speculations by sitting two rows apart, the two reportedly spent the night together. Kate, who left her apartment in Chelsea at 9pm and arrived at Clarence House - William’s London home, around midnight parked her Audi car at a Mayfair hotel car park, which was later driven by an aide to Clarence House. Kate failed to return back to her house until 4am.


Prince Harrys behavior was contrasting his brother William, as he was seen flirting and kissing his girl friend Chelsy Davy in the very front row.

Officials of the royal family bluntly refused to comment on Williams private life and his relationship with his supposedly former girlfriend. However, a senior royal source said,

They are of course close friends and have remained so since April. But they both want space and do not want to conduct their friendship with the added attention and pressure of more speculation. They particularly did not want their friendship to be the focus of media attention. Yesterday was about Diana and celebrating her life and work.

Read More
Posted by: Nishtha      Read more     Source

Tue, 03 Jul 2007 20:46:24 GMT

Sign of Hope

Life-giving rainfall seems to be feast or famine at Roundrock. The trees I have planted can’t rely on me to visit regularly and water them, so they must depend on what falls from the sky or what they can find in the ground. We knew this when we planted our many trees, so if they succeed or fail, we accept what comes.

And so we resigned ourselves to the failure of two cypress trees we had planted in good soil near the lake several years ago. These weren’t nursery bought but volunteers that had come up in our suburban back yard. (We have two large, happy cypress trees there.) Although these Roundrock transplants had made comebacks in past springs, they would lose all of their leaves by mid-summer and remain sticks through the winter, and they showed no signs of return this spring.

The problem, of course, is water. Our idea was that these two trees would rise by the shore of the full lake, and their roots would reach to the nearby water to keep the tree nourished. The lake didn’t cooperate, as long-time readers of this humble blog know. As the water line receded, the trees’ chances did as well.

But the cycle begins again, as you can see above. Amidst all of the green jumble in the photo, you can just maike out some pale, wispy leaves just about at the center. Those emerged unexpectedly from the forsaken stalk of the presumably dead cypress, telling me that there is life in the old stick yet. They’ve made their appearance late in the season, but there they are.
This was the year the lake achieved a full pool (though only briefly, but that’s a different lament), so this cypress, the one close to the water line, seemed to bounce back and show a bit of its potential. The sickly green of the leaves tells me that it wasn’t much of a bounce, but the stick lives and there is some hope.

Missouri calendar:

• Eastern bluebirds begin third (last) nesting.

Posted by: Roundrockjournal      Read more     Source

Tue, 03 Jul 2007 19:44:14 GMT

Rush for Biofuel Causing Damage to the Environment

According to a report in The Telegraph, the rush for biofuels is causing a lot of damage to the environment. A campaign group has been quoted saying that whole ecosystems are being destroyed and hundreds of thousands of people being displaced to make way for crops required for biofuels.

The campaign group has claimed that some biofuels are no better than the traditional fossil-fuels. They do not help in cutting emissions - lot of fuel is used up in manufacturing of the biofuel.

The report says that even the term biofuel is a misnomer and should instead be called agrofuel.

The report claims that in Latin America, Asia and Africa, the push for agrofuels is leading to the reintroduction of the old colonial plantation system at the expense of indigenous farming systems and local communities. [Remember indigo plantation in our country India. The local farmers were forced to cultivate indigo that was more useful to the ruling community and was not needed by the farmers. It was an unjust practice with which Mahatma Gandhi started his struggle in India.]

The report adds:

The EU has said it wants to see at least 10 per cent of road fuel derived from plants by 2020 and President Bush recently announced a 15 per cent target for the replacement of petrol by biofuels in US vehicles. In the next 18 months, biofuel production in the US will double to about seven per cent of the petrol consumed.

The increasing acceptance of biofuels as an environment friendly alternative to fossil fuels, I believe, is not good. There are certain alternatives which can help countries tackle the growing demand of energy. In India, the fuel obtained from jatropha seeds is being promoted and efforts are on to convert the oil extracted from jatropha seeds into efficient fuel for vehicles.

The government is promoting plantation of jatropha on arid and practically barren land. This is looked at as an opportunity to help people living in less fertile areas generate income along with boosting the fuel supply.

This is believed to help save lot of foreign reserves which is till now being spent on fuel imports. As far as jatropha is concerned, it is a good way of making use of land which was so far least productive.

Even as I say that the land is least productive, this does not mean that the land should be planted without any consideration. These lands are as much part of the ecosystem and have their own importance. Proper studies should be done before human intervention into these areas. There are several instances of damage caused to the ecosystem by human interference in way of introduction of new species, both deliberate and accidental. Introduction of foreign species have caused serious ecological threats.

Use of sugarcane, maize and other crops for production of biofuels pose another challenge. A lot of crop that could have fed humans ends up in fuel tanks of vehicles instead of hungry people. The increasing demand of maize for ethanol production for use as fuel along with petrol and diesel has caused the maize prices to go up. This affects the poor the most who live on the crops which are now increasingly being used for production of biofuels.

The alternatives to traditional fuels must be searched, both to meet the increasing energy demands as well as saving our climate and environment, but judiciously. It should never happen that with the intent of saving the earth, we further worsen the situation.

Image Source: Telegraph


Source: Telegraph
Posted by: Bahadurshahzafar      Read more     Source

Tue, 03 Jul 2007 16:41:58 GMT

Top 15 rules of investment

1.When you choose a financial advisor, look at the scalp. If there are any gray hairs, it means they've been around long enough to see financial cycles. If you're really lucky, they've already screwed up a few times at someone else's expense so they know the score.

2. Beware of assets. If it doesn't earn profits this year, or next year, it's no asset. Doesn't matter whether it's tangible or intangible. The only difference between a brand name and a plant is the residual value of the real estate on which the plant is built, and maybe the building as well. Otherwise, assets are only worth what they earn and if they're not earning now, they'll soon be written down to zero. Want evidence of that? Think back to the tech boom.

3.When there's a takeover, don't be fooled by the propaganda and hype. Check the numbers and remember, the first takeover is rarely the last. Also remember that in any takeover, cash is king. The folding stuff is simple and uncomplicated. You can count it, bank it or reinvest it. But scrip is messier because you can only do one thing: analyze the raider's accounts and assess whether the shares represent a good investment and whether you would invest in the company at that price.

4.Cash flow is your friend. If a company's stated revenue in the profit and loss account is higher than the cash flow, it probably means the company is front-loading the revenues, declaring them in their entirety before all the money comes in through the door.

5. A rising market makes any prospectus a good prospectus. When the market is running hot and every dog gets listed at a premium, applying traditional financial analysis to a prospectus is just a waste of energy.

6.Don't be loyal to stocks. Save that for your football team.

7.Watch out for any company that capitalizes enough of its expenses to declare a monster profit alongside a strong balance sheet: it's usually broke.

8.Independent directors might be good corporate governance practice. But usually, they are next to useless when dealing with strong management.

9. Directors who charge consultancy fees, or commissions, are usually out to enrich themselves, not shareholders. Remember, the only reason you have a company director is for him or her to give the board their best advice and help it make good decisions that are in shareholders' interests. For this, they get paid massive directors' fees. If they're collecting commissions on top of that, they're double dipping.

10.Buy in gloom, sell in boom. And remember, keep an eye on great companies when they make mistakes. If a solid company with a sound business, good brand name, and solid cash flow screws up, it will get hammered by the market. That can create some excellent investment opportunities.

11.All booms go bust.

12. Follow the leaders.

13.Never ever gamble in the stock market. If you want to gamble, go to the casino or race track.

14.Diversification is they key to protecting your money. To minimize the risk of loss, spread your money around, not only between shares, fixed interest and property, but also between countries.

15.The pain of losing is greater than the pleasure of winning. That's why you should always start your examination of an investment by examining the potential downside. It all boils down to risk/reward. That's the difference between a risk worth taking and a sucker's bet. Posted by: leon      Read more     Source

Tue, 03 Jul 2007 08:26:35 GMT

Dubai: Most Congested City in the Middle East

Dubai, the tourism and trade hub of the Arab world also tops as its most crowded city,as ranked by 5,000 professionals in 14 Middle East cities. Bumper-to-bumper traffic holds commuters for over two hours daily even as the city has the Middle East’s largest shortage of parking space.
While investors have given more impetus to glamorous mega projects, such as a tower in Dubai that developers say will be the world’s largest when complete next year and date palms island. In the process, transport and housing infrastructure has lagged far behind.

The 15-kilometer commute from the neighboring UAE emirate of Sharjah, where many expatriates live, takes an average of two hours and 44 minutes roundtrip despite two express highways. To add to their woes, the population of the city is likely to double again to more than 2 million by 2015.

Dubai is planning a four-line metro system which should begin operations in 2009, a floating bridge over Dubai creek, the city’s main waterway, and water taxis that will run along the creek and to the man-made islands off the coast to ease congestion.

So if you plan to live in the middle east then it would be best to opt for Jeddah, in Saudi Arabia, which was found to be the least congested city, with an average commuting time of 46 minutes. After Dubai, Cairo was found to be the second-most congested city, with average daily commuting times of one hour and 33 minutes.

Image credit

Source: Reuters Posted by: Kanchan      Read more     Source

Tue, 03 Jul 2007 04:05:05 GMT

Book Review: Work Like Your're Showing Off

There is no shortage of self-help/motivational books out there, and before reading Work Like You're Showing Off, I had no idea who Joe Calloway was. But after reading the book, I want to hear more from him.

It's not that Calloway has anything particularly new to say. His basic message is to be exceptional. "Showing off" is just another way of saying "be excellent," "go above and beyond," etc.

The reason the book's worthwhile is that Calloway has enough of an edge to his writing that it's not just about telling you how to be exceptional. It's challenging you to be exceptional. It's saying, "If you want to be exceptional, go do it." He never says it in the book, but I could almost imagine Calloway saying, "Why are you reading this book when you could be out there doing something great? Put the book down, for God's sake!"

He comes across sort of like that favorite uncle who prods you to do good, and who you don't want to let down, because you hate to see him shake his head and give you that look that says you haven't lived up to your potential.

A few quotes from the book that I enjoyed, and that show the style you can expect:

"'You just want me to bust my butt and do extra work to make everybody else happy and make my company more money and take advantage of me!' Yeah right. Cry me a river."

"It's all well and good to listen to your friends' advice and counsel. But sometimes you just have to take it all in and then say, "To hell with it. I'm doing it anyway.'"

"Why should you get the promotion instead of your co-worker? You say because you're the best choice. Fine. But don't tell me. Show me. Prove it. Put up or shut up."

This part is my favorite, because I think it's the perfect thing for people who don't excel because they feel like they still haven't found the job that totally excites them and fits their every qualification for the perfect career:

"One thing that has always irritated me is this idea that if you just 'follow your passion' the windows of heaven willopen up and shower you with success and peace of mind and life will be a bowl of self-actualized cherries. Right. If only it were that simple. My problem is that I'm not completely sure what my passion is when it comes to work.

....

Rather than just quit work and go on a sabbatical to discover some burning career passion.... I've decided to go all in with my work...."

In other words, thinking your work is not Utopia is not a valid reason to not do an exceptional job at it. That's a message a lot of us need to hear, and Calloway tells it with a style that I think is more refreshing than the typical self-help voice.

If you're in the career doldrums, this book might be the kick in the pants you need. Posted by: Justin McHenry      Read more     Source

Fri, 29 Jun 2007 12:20:48 GMT

They'll Build Your Fantasy Car

There isn't much you can't do with enough money. That includes ordering an Italian speciliast builder to build an Antas car based on your personal design concepts for, say, $800,000, which is what Faralli & Mazzanti of Pisa are willing to do, starting with their demonstrator skeleton and chassis. Founded more than 40 years ago and specialising in restoring aluminum-bodied classic cars, the company produced the famous Maserati 450S Costin-Zagato (the "Monster," a one-off car made for Sir Stirling Moss to drive at Le Mans); no less than five Cisitalias and Lancia Astura Aerodinamicas, (of which there are only two left in the world); and the famous Ferrari 500 Mondial. Each and every model will be unique, as the first step in ordering an Antas is for the engineer to sit with the client and sketch his most preferred styling. As an automotive fantasy for the rich-and-famous it must surely be the ultimate gift. For the rest of us, more concerned with climate change and the search for renewable fuels, it is one more example of (no, I won't suggest greed) indulgence gone astray. If all these brilliant engineers and supercar designers were to put their heads together to re-invent the automobile, our earth and its cars would be the beneficiaries. Posted by: Philip Powell      Read more     Source

Fri, 29 Jun 2007 12:16:45 GMT

Eucalyptus coccifera

In a typical year, this Tasmanian snowgum looks like this, full of foliage and flowers. However, the harsh, extended cold of last winter killed most of the exposed living tissue. This left the tree covered in grey-brown dead leaves; for a few months, it looked dead. As you can see, though, the tree is recovering.

The effect of the cold replicated a phenomenon more often seen in Eucalyptus after a severe fire — regrowth from epicormic buds (i.e., buds within the bark of the tree). The abstract from this paper, Epicormic strand structure in Angophora, Eucalyptus and Lophostemon (Myrtaceae) – implications for fire resistance and recovery by Burrows in 2002, summarizes the phenomenon tidily: “In most angiosperm trees dormant epicormic buds are present in the outer bark, a position where they could be killed by fire. By contrast, in eucalypts the greatest epicormic bud initiation potential is at the level of the vascular cambium, which is protected by the maximum bark thickness. This might explain the pronounced ability of eucalypts to produce bole and branch epicormic shoots after moderate to intense fire.” I'll repeat myself and append “or moderate to severe cold”.

I don't know how many years will be required before the plant flowers again, but it seems to be on the road to recovery. In contrast, a number of younger plants of other species of Eucalyptus in the Alpine Garden did not have thick enough bark to withstand the cold. I believe the dead plants are slated for removal. Posted by: Daniel Mosquin      Read more     Source