How I Became One of the Most Hated People on Wall Street

Throughout nearly four decades as a journalist, I unintentionally became known in some circles as 'the worst man' on Wall Street... It's not like I set out to make enemies. My first job out of college was with the now-defunct Boca Raton News, where I was the paper's first business reporter. Next, I spent a […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] How I Became One of the Most Hated People on Wall Street By Herb Greenberg --------------------------------------------------------------- [The Biggest Untold Investment Story of 2022]( How the huge shake-ups this year have opened a once-in-20-years backdoor that could transfer money from Wall Street's wealthiest investors into your account... From a man whose exposés in Fortune, the SF Chronicle, and TheStreet.com have brought him death threats. [Click here to learn more](. --------------------------------------------------------------- Throughout nearly four decades as a journalist, I unintentionally became known in some circles as 'the worst man' on Wall Street... It's not like I set out to make enemies. My first job out of college was with the now-defunct Boca Raton News, where I was the paper's first business reporter. Next, I spent a year working for Amusement Business, until I decided to get back to daily journalism. (As it turns out, covering carnivals and circuses prepared me for my days of covering Wall Street!) I've covered everything from airlines to railroads, retail, industrials, and everything in between. Eventually, I moved to New York to become the Chicago Tribune's financial correspondent, where I covered Wall Street as well as several prominent insider trading trials. I call myself one of the most hated men on Wall Street because my exposés would sometimes result in a company being shut down, executives going to jail, and people losing their jobs. Obviously that stuff bothered me... But I was proud to be that rare journalist who stopped at nothing to get the full – and often ugly – truth... which means you have to look out for all the traps people set for you in this business to get you to shut up. For example, I remember investigating a hot tech IPO called Media Vision back in the 1990s... The Bay Area company made sound cards for computers. CEO Paul Jain was aggressive, determined to ride all that dot-com money to an all-time high. He started cutting corners. In particular, he would allow his company to book a profit on products they hadn't even made yet. Your typical journalist might have just quoted a few angry employees and run the story without any further research. Not me. I got my hands on the actual receipts... which showed falsified revenue numbers on parts that were on a slow boat from China. But even that wasn't enough evidence for me. I worried that my sources at the company were falsifying these documents, perhaps trying to trick me into publishing a libelous story so they could sue me. So I met with other employees and gathered receipts and documents from as many sources as I could. --------------------------------------------------------------- Recommended Link: ['God Code' Now Programmable]( For the past 50 years, developers and programmers used the binary code to create every piece of software you use today. But now, highly specialized programmers are using a different code to make everything from vaccines to plant products to data-storage devices and more. McKinsey, a leading consultancy, claims this code will usher in a $4 trillion industry. And Wall Street is starting to take notice. The man CNBC nicknamed "The Prophet" says he's found the one little-known company that has the potential to rule this industry and become America's Next Big Monopoly. [Get the full details here](. --------------------------------------------------------------- What I discovered shocked me... The financial engineering was worse than I could have imagined. As I wrote at the time in a column in the San Francisco Chronicle... According to a statement by Ron Svasek, Media Vision's former credit manager, the company capitalized the cost of its annual Christmas party in 1993 – a lavish affair at the Fairmont Hotel in San Jose. By capitalizing expenses, companies defer recognizing them until a later date. It's perfectly legitimate if a company believes the expenses are tied to something with future value, such as sales. But deferring expenses make a company's earnings look better, so some companies often aggressively interpret the rules surrounding capitalization. At Media Vision, Svasek says the company capitalized the Christmas party because it felt that "no real benefit would be derived from the party during the last week or so of 1994... I guess that's just somebody's idea of rationalizing and justifying a lavish affair." The company was also hiding products in its warehouses so that its returns wouldn't hurt its earnings and knowingly shipping out defective items. In doing my diligence, I even discovered that Jain had previously been fired from a previous job for what court filings described as "his use of dubious and unethical business practices to overstate revenues and earnings." I remember setting up an interview with one Media Vision employee who had me worried for my safety... I thought, "Can I trust him? What if he shows up to my office with a gun?" So I arranged to meet with him in a big glass room in the lobby of the San Francisco Chronicle headquarters, and I made a point of letting all my colleagues know who I was meeting with, in case something happened to me. But it worked out, because I was able to piece together dozens of line items on invoices matching up with parts from a third-party manufacturer. And I determined the company was, in fact, booking revenues on products that hadn't been assembled yet. Still, the stock continued higher... for a while. After the stock rose 22% following one of my short reports, Jain triumphantly called me up to say, "That confirms that this is a high-quality story." Several months later, Media Vision reported dismal earnings. The stock, which peaked around $46 in January 1994, was trading below $2 by the summer... And the company, which was the fastest-growing publicly traded company in San Francisco a year earlier, ultimately filed for bankruptcy, sold off its product line, and changed its name... and Jain and his CFO ultimately went to prison for securities fraud. The Media Vision story taught me a few valuable lessons... For one, some executives will do whatever it takes to juice their earnings in an attempt to justify their companies' share prices. Two, I take what many CEOs say with a grain of salt – especially those who share Jain's bravado and bluster. Of course, that's not to say that all CEOs are lousy. In fact, some of them are great! But others are so concerned about their share prices that they're willing to do whatever it takes to push their share prices higher.  And three, movements in stocks often have little to nothing to do with the business. Sure, every investor wants his stocks to go up. That's simple human nature. But sometimes, stocks rise simply because of unsustainable momentum. As we've seen over the past couple of years, information has never flowed faster. Now, you can even get "hot stock tips" on Twitter (TWTR) ("FinTwit"), TikTok ("FinTok"), and Reddit (WallStreetBets), where anonymous users hiding behind a generic username pushed "stonks" like GameStop (GME), AMC Entertainment (AMC), and Hertz (HTZ) to unbelievable heights. What I wrote in a 2004 MarketWatch column remains as true today as it did back then... It's all really a game, and in the end, as we all know... it works until it doesn't. You can justify all kinds of valuations using all kinds of wacky metrics as long as stocks are going higher. It's funny how some of those methods of valuation look so silly after the fact. Is it different this time? No – just as it wasn't during the bubble. When the music stops you still need to find a chair. It's remarkable so many investors still haven't learned that lesson. What's happening, after all, is so 1999. Except that instead of Amazon (AMZN), we have Overstock (OSTK). Though my days of finding stocks to short are largely in the rearview mirror, I'm still wired to be a skeptic... These days, I'm using everything I've learned over the last 48 years to find compelling stocks to buy. I'm leveraging my invaluable network, including my brilliant colleagues at Empire Financial Research, who have successfully managed their own hedge funds, worked at the top Wall Street firms, and generated billions of dollars of profits for their clients. I'm digging through countless investment ideas, reading through earnings reports, and leaving no stone unturned. In short, I'm shaking all of the trees in search of the next great investment ideas. I'm thrilled that this Thursday, March 24 at 8 p.m. Eastern time, I'll finally be able to share my findings with you. And as my way of thanking you, I'll even share the name and ticker symbol of one of my favorite stocks you can buy today. I hope you'll join me there. [You can save your seat by clicking here](. Regards, Herb Greenberg March 22, 2022 P.S. Ever the skeptic, I'll also share the name and ticker of a popular stock we urge you to avoid at all costs. And I'll explain why a particular niche of the market is filled with garbage right now... and how a "backdoor" hidden within could help you build serious wealth if you're willing to try something new. [Click here to learn more](. If someone forwarded you this e-mail and you would like to be added to my e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2022 Empire Financial Research. All rights reserved. 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