The Number: How the Drive for Quarterly Earnings Corrupted Wall Street and Corporate America

By Alex Berenson

With a brand new Afterword through the writer and a brand new Foreword by means of Mark Cuban

In this commanding big-picture research of what went fallacious in company the US, Alex Berenson, a most sensible monetary investigative reporter for The big apple Times, examines the typical thread connecting Enron, Worldcom, Halliburton, desktop affiliates, Tyco, and different contemporary company scandals: the cult of the number.

Every 3 months, 14,000 publicly traded businesses document revenues and earnings to their shareholders. not anything is extra vital in those quarterly bulletins than profits in keeping with percentage, the lodestar that investors—and nowadays, that’s such a lot of us—use to pass judgement on the healthiness of company the US. profits according to proportion is the quantity for which all different numbers are sacrificed. it's the distilled fact of a company’s health.

Too undesirable it’s usually a lie.

Alex Berenson’s The Number offers a comprehensiv, brutally genuine assessment of ways Wall highway and company the United States misplaced their manner through the nice bull industry that started in 1982. With wit and a extensive ancient viewpoint, Berenson places contemporary company accounting (or responsibility) failures of their right context. He explains how the wheels got here off the wagon, giving readers the data and research they should comprehend Enron, Tyco, WorldCom, Halliburton, and the remainder of the company calamities of our instances.

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Sixty two. The S&P 500 peaked weeks later at 1,527. forty six, with a price-earnings ratio of 29 and a dividend yield of one percentage. Seventy-five percentage of analysts’ suggestions have been buys or powerful buys, the top percent ever. simply seven out of each a thousand strategies have been sells or robust sells. 38 a similar month, the amount of money held via inventory money fell to four percentage, the bottom point ever. Surveys confirmed that traders have been as bullish as they'd ever been. “Everyone is bought at the proposal of the recent financial system and everybody wishes in,” one strategist stated on March 10, the day after the Nasdaq crowned out. 39 It used to be the worst second to shop for shares in seventy years. bankruptcy eleven fact Bubbles are enjoyable. Bubbles are nice. however the days whilst the industry actually grips the mind's eye are the times whilst it truly is crashing, whilst each six seconds brings one other tick down, whilst the Dow appears (and occasionally is) shedding 10 issues a minute, while Bloomberg displays are choked with crimson and the anchors on CNBC communicate slowly and don’t try and cover their misery. We’re all during this jointly, their faces say. We’ll get via it. in the course of the worst panics, the industry doesn't make even a halfhearted try to rally. It closes on the day’s lows, and one has the experience that if no longer for the four P. M. bell, costs may fall till the Dow and the S&P 500 and each inventory in all of them hit 0, or even then investors might try and promote brief. The very notion of a backside is laughable. just a night’s leisure can convey sanity again to the area. however the worst crashes don't final only one day. The margin calls exit, traders come to a decision they have to promote at any expense, and the downward spiral resumes on the commencing bell. And so the evening turns into a time for staring at and ready: What are S&P futures doing in Japan? the place have the eu exchanges opened? Are there any executive experiences due out that would finish the turmoil, or make it worse? All this even supposing the market’s habit in the course of a crash is totally unpredictable. traders can take a vulnerable monetary quantity as evidence that the Federal Reserve will reduce rates of interest and advance stocks—or as facts that the economic climate is falling right into a bottomless melancholy. After the 1st day of a crash, not anyone can recognize the place it's going to finish. it's a strength of nature up to any typhoon or earthquake. The earthquake hit in April 2000. expertise shares had misplaced air for a number of weeks, falling approximately 10 percentage from their highs. Then, on Monday, April 10, the Nasdaq fell 6 percentage, the start of per week while it is going to lose greater than one-quarter of its worth. in the beginning restricted to expertise shares, the rout unfold by way of Friday to the remainder of the industry; the Dow dropped 617 issues that day, its largest element loss ever, whereas the Nasdaq dropped virtually 10 percentage. As in 1929, no unmarried revenue file or piece of financial facts triggered the sell-off; traders easily made up our minds en masse they can not justify possessing shares that traded at 200 or 300 or instances profits, or had no gains in any respect and no prospect of constructing any.

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