Wall Street Is Lying to You

Editor's note: On Saturday, our friend and colleague Joel Litman from our corporate affiliate Altimetry explained a problem with Wall Street's understanding of accounting. This week at Empire Financial Daily, we'll be featuring more insights from Joel and his team about how the standard way that companies report their financial numbers is flawed. As he […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] Editor's note: On Saturday, our friend and colleague Joel Litman from our corporate affiliate Altimetry explained a problem with Wall Street's understanding of accounting. This week at Empire Financial Daily, we'll be featuring more insights from Joel and his team about how the standard way that companies report their financial numbers is flawed. As he explains today, Joel says that you can't trust the numbers you read on Wall Street... and that he has seen some of the biggest distortions in the financials occurring in a specific set of stocks. Here's Joel... --------------------------------------------------------------- Wall Street Is Lying to You By Joel Litman --------------------------------------------------------------- [Log into Joel's $100,000 website]( A new way to see which of 5,252 stocks could double your money, developed by a Boston professor who has advised the U.S. Pentagon. [Click here to see it (includes FREE stock recommendation)](. --------------------------------------------------------------- Few things make a stock go up or down more than its quarterly earnings announcement... If a company beats Wall Street's expectations, the stock usually takes off. If it doesn't, the stock often plummets. But I've discovered something controversial about these earnings announcements... something so eye-opening, I've been invited to lecture about it at Harvard, Wharton Business School, and the world's top CFA societies. Simply put: You can't trust any of the numbers you read on Wall Street. But as I'll explain in today's essay, I've developed a way to correct for this, using something called "forensic analysis." One glance at the real data can help you see which stocks have the realistic potential to rise 1,000%... and which could be worthless. Let me explain... In short, almost every single publicly reported earnings number for thousands of different companies contains huge miscalculations of earnings, assets, and even debts that 99% of investors are unaware of. The companies aren't lying, per se... They're reporting what they believe to be accurate records of their earnings, based on the current accounting laws. But after three decades on and off Wall Street – at places like Credit Suisse (CS) and as a certified public accountant at Deloitte and PriceWaterhouseCoopers – I've discovered that the generally accepted accounting principles ("GAAP") are chock full of misleading inconsistencies. The current accounting laws simply don't allow for a true representation of a business. Profits, assets, and entire financial statements are completely distorted from economic reality. Altogether, I've found more than 130 inconsistencies within GAAP that cause earnings to be distorted every single quarter. Over decades, my team and I have developed a form of forensic accounting that allows us to see the true numbers, weeks or even months before the general public catches on. It takes weeks to run our forensic analysis on a single company, because we have to correct or "adjust" hundreds of items in the financial statements. But it's worth the effort... because the numbers we uncover are often hundreds of percentage points higher or lower than what's reported to the public... which can send the stock price soaring. --------------------------------------------------------------- Recommended Link: [Hedge-fund legend predicts $3.8 trillion industry's 'master reset']( Few people understand the full gravity of what's happening. But Wall Street veteran Enrique Abeyta is predicting a "Master Reset" in one $3.8 trillion industry. And it's already starting. [Abeyta reveals everything right here](. --------------------------------------------------------------- Take Advanced Micro Devices (AMD), for example... A few years ago, the semiconductor company appeared to be barely making any money. But in reality, AMD's earnings were nearly three times higher than what was publicly reported. In January 2015, in an article in Barron's, I said, "The credit markets and credit-rating agencies are grossly overpricing default risk at AMD." As you can see, despite a recent pullback, the stock has since risen more than 3,000%... Even after this historic run, the market still doesn't recognize AMD's true earnings. Last year, Wall Street yet again significantly underestimated the company's return on assets ("ROA")... and is doing so this year also. Take a look...  After its historic run higher, AMD is a nearly $150 billion company and its biggest gains are likely behind it. But it's still growing its real ROAs, so I wouldn't bet against it altogether... Now, you might be surprised to learn that 'forensic accounting' has this much power... But the fact is, this strategy is how we've uncovered and recommended huge winners over the years. In fact, some of my institutional clients pay us up to $100,000 per month for our forensic analysis, which has uncovered so many earnings distortions that the FBI asked us to teach it at the National FBI Forensics Conference. As my good friend Porter Stansberry – the founder of Empire Financial Research's corporate affiliate Stansberry Research – once said, "This approach is like a crystal ball. You can see the world in a way other folks don't... yet." How can a company legally report a certain number for its earnings when the real number is much different? Well, frankly, the GAAP rules weren't built for individual investors. Instead, they're a mishmash of overly complex, unclear, and often antiquated rules that result in huge distortions from economic reality... Like whether you depreciate expenses based on five years, 10 years, or 20 years... where debt is categorized... and hundreds of "non-cash" items that can distort the company's true earnings generation ability by hundreds of percentage points. In the wake of the 2020 COVID-19 crash, my team and I ran our forensic analysis on the entire stock market... and we were surprised to discover that the biggest distortions have occurred in microcap stocks. Fast-forward to today, and I believe the public is dramatically underestimating how strong earnings growth will be in 2022, regardless of what's happening in the overall market. And this will be most obvious in the smallest stocks – microcaps. In fact, there's an untold story going on right now – and it's the main reason why my team and I at my company Altimetry are so bullish. This could send some very specific microcaps soaring this year. In a brand-new presentation, I share all the details... [Watch it here](. Regards, Joel Litman June 13, 2022 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. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Empire Financial Research, 601 Lexington Ave., 20th Floor, New York, NY 10022 [www.empirefinancialresearch.com.]( You received this e-mail because you are subscribed to Empire Financial Daily. [Unsubscribe from all future e-mails](