Peter’s Book Free of Charge – Confessions of a Wall Street Whiz Kid

What 30 Years In Finance Has Taught Me

A result like this hasn’t surprised me for years because one man showed me that the stock market is not remotely close to what so many have tried to make us think it is. Heck, not even 1 out 4 so-called money managers can even match or surpass the index they’re matched up again (translation – better to buy an index fund versus any other).

As noted in my book, one man would forever change the way I look at finances. Frank Congilose taught me that 99% of all so-called advisers will fail—not because they’re dishonest but because their approached is badly flawed. And Frank is the only person I ever met among the thousands over 30 years that is both very bright and very honest. In my experience, an especially smart person usually tries to push the envelope (if not go into gray areas), and if they happen to be the minority that is totally honest, they are far from “Rocket Scientists.”

It was about 15 years ago when Frank first ruined my day by basically showing me everything I was told in the first half of my career was doomed to fail. He then proceeded to show me a process that truly offers far less risk, an opportunity for a far better lifestyle and no additional capital in order to achieve goals. That’s the good news.

….read more HERE

A company’s financial statements and related disclosure documents are arguably the most important sources of information that an analyst or investor has when analyzing a company. Every quarterly period (3 months), a publicly-traded company is required to file their unaudited quarterly financial statements with audited financial statements required within 90 days of the end of the fiscal year. In addition, companies are also required to file other disclosure documents (such as the AIF, Informational Circular, certifications, etc.) throughout the year as prescribed by securities legislation. This information is intended to give the investment community reliable information for company-specific analysis and is available to the public on the government website www.SEDAR.com. 

Companies are required to prepare and release quarterly and annual financial reports which include four financial statements and the associated footnotes. The financial statements are absolutely crucial for company analysis with each of the individual statements providing a different type of information.

1. Balance Sheet – This is a snapshot of what we call a company’s financial position – the makeup of assets, debt, and shareholder’s equity. People, like companies, also have balance sheets whether they know it or not. Using a house as an example…the house and the property it sits on are an asset. But people don’t typically own 100% of that asset (at least not before 25 to 30 years) and use debt borrowed from a bank to partially finance their ownership. Debt is a liability and represents the portion of the asset which is owned by the creditor. The difference between assets and liabilities (assets minus liabilities) is the owner’s (or shareholder’s) equity in the asset or the company. The balance sheet will tell us how much equity the shareholders have in the business, the debt and cash levels, as well as provide insight into any impending financial risks.
2. Income Statement – This statement provides a breakdown of a company’s revenue, expenses and profit over a specified period like a quarter (3 months) or a year. Investors and analysts can use the Income Statement to figure out useful information about a company’s profitability, revenue growth, margins and what specific expenses impact earnings the most. The very first step that KeyStone analysts take when looking at a new company is to go to the Income Statement and see if the business is generating revenues and profits.
3. Cash Flow Statement – This financial statement is somewhat similar to the Income Statement except that instead of focusing on accounting-based profits, it focuses on actual cash flow. This is very important because profits on the Income Statement do not necessarily reflect the actual economic (cash-based) profit being generated by the company. Income statement items are often impacted by accounting assumptions and conventions (or even trickery), which do not present an accurate picture of financial performance. For this reason, many investors and analysts consider the Cash Flow Statement to be more reliable than the Income Statement.
4. Statement of Shareholder’s Equity – We won’t spend any time on this financial statement as it is less commonly used by investors and analysts. 

In addition to the financial statements, companies also release a number of other documents at set frequencies, some of which are required by securities law and some of which are optional.

1. Annual Report – Many investors and analysts consider the Annual Report (an optional document) to be the most comprehensive document for company-specific investment analysis. In here you will typically find all of a company’s annual financial statements, the footnotes, the MD&A and generally a broader overview of the company’s ongoing strategy, progress and current situation.
2. Management Discussion & Analysis (MD&A) – This is where the management of a company have the opportunity to step outside of the pure numbers and actually discuss what has been going on with the business. Here an investor may find a management outlook for financial performance or for the industry, financial metrics that are not specified in the financial statements (such as EBITDA or free cash flow), a discussion of the underlying assets, as well as many other potentially useful pieces of information. A review of the MD&A is crucial for an analysis on a company but information provided in this document is at the option of the company and some MD&As provide far more detail than others.
3. Footnotes – The Footnotes are not separate documents but are included in the same document as the Financial Statements. They provide a very detailed explanation of the items inside the financial statements as well as other details on the company. Because the Footnotes are so detailed (and boring), they are often overlooked. However within the Footnotes, investors can find very crucial information such as revenue recognition policies, off balance sheet liabilities, debt maturity breakdowns, along with many other important sources of data. It is often said that if a company is trying to hide something then they will bury it deep in the financial footnotes.
4. Annual Information Form (AIF) – This form (which is issued once per year) is also often overlooked by investors and analysts but can provide excellent background on the company, its industry and its products. Many questions about the structure of the business and the business model can be answered by reading through the AIF.
5. Management Information Circular (or Proxy Circular) – This is yet another useful and often overlooked document. The Information (or Proxy) Circular is released in advance of the Annual General Meeting (AGM) and provides details about the issues on which shareholders will be asked to vote. A very useful feature of this document is that it discloses who the major shareholders of the company are as well as management’s compensation and compensation structure.

5 Secrets of Success & 3 Biggest Challenges Facing Investors. An uncensored frank discussion with two titans of industry: PIMCO Founder and co-Chief Investment Officer Bill Gross, and BlackRock CEO Larry Fink. Presented by UCLA’s Anderson School of Business, the two discuss the five secrets of their success and the three biggest challenges facing investors.