Bull Market - A random market movement causing an investor to  mistake himself for a financial genius.

Bear Market - A 6 to 18-month period when the kids get no allowance, the wife gets no jewelry and the husband gets no sex.

Momentum Investing - The fine art of buying high and selling low.

Value Investing - The art of buying low and selling lower.

P/E Ratio -The percentage of investors wetting their pants as the Market keeps crashing.

Broker - Poorer than we were in 1999.

"Buy, Buy" - A flight attendant making market recommendations as you step off the plane.

Standard & Poor - Our life in a nutshell.

Stock Analyst - Idiot who just downgraded our stock.

Stock split - When your ex-wife and her lawyer split all your assets equally between themselves.

Market Correction - The day after you buy stocks.

Cash Flow - The movement our money makes as it disappears down the toilet.

Call Option - Something people used to do with a telephone in ancient times before e-mail.

Day Trader - Someone who is disloyal from 9-5.

Cisco - Sidekick of Pancho.

Yahoo - What we yell after selling it to some poor sucker for US$240 per share.

Windows XP - What we jump out of when we're the sucker that bought Yahoo for $240 per share.

Institutional Investor - Past year investor who's now locked up in a nut house.

Profit - Religious guy who talks to God.

Bill Gates - Where God goes for a loan.

Alan Greenspan - God

Supreme Court rules earnings should be protected as "Art"

 

Recognition of Pro-Formalist Movement Gets WorldCom, Andersen Off Hook

 

Washington, D.C. (SatireWire.com) — In a surprise decision that exonerates dozens of major companies, the U.S. Supreme Court today ruled that corporate earnings statements should be protected as works of art, as they "create something from nothing."

 

"One plus one is two. That is math. That is science. But as we have seen, earnings and revenues are abstract and original concepts, ideas not bound by physical constraints or coarse realities, and must therefore be considered art," the Court wrote in its 7-2 decision.

 

The impact of the ruling was widespread. Investigations into hundreds of firms were cancelled, and collectors began snatching up original balance sheets, audits, and P&L statements from WorldCom, Enron, and Global Crossing. Meanwhile, auditing firms such as Arthur Andersen (now Art by Andersen) were reclassified as art critics, whose opinions are no longer liable.

 

"Before we had to go in and decide, 'Is it right, or is it wrong?'" said KPMG spokesman Dan Fischer. "Now we must only decide, 'Is it art?'"

 

In Congress, all further hearings into irregularities were abandoned in favor of an abstract accounting lecture given by Scott Sullivan, former Chief Financial Artist of WorldCom, which had been charged with fraud for improperly accounting for $3.85 billion.

 

"Art should reflect life, so what I was really trying to accomplish with this third quarter report was acknowledge that life is an illusion," said Sullivan, explaining his acclaimed work, "10Q for the Period Ending 9/30/01."

 

U.S. Rep. Billy Tauzin of Louisiana, however, was forced to apologize, admitting he could only see a lie.

 

"Yes, well, a man with a concretized view of the world may only be able to see numbers that 'Don't add up,'" said a haughty Sullivan. "But someone whose perceptions are not always chained to reality — a stock analyst, say — may see numbers that, like the human spirit, aspire to be greater than they are."

 

Several Sullivan pieces are now part of a new show at New York's Museum of Modern Art entitled, "Shadows & Spreadsheets: The Origins of Pro-Formalism."

 

Robert Weidlin, an SEC investigator and avid collector, was among the first to peruse the Enron exhibit, which takes up an entire wing of the museum "You look at these works, and you say 'Is this a profit, or a loss? Is this firm a subsidiary, or a holding company?'" said Walden. "I have stood in front of this one balance sheet for hours, and each moment I come away with something different."

 

Like other patrons, Weidlin said he didn't know whether to be impressed or outraged, a reaction that pleased Andrew Fastow, the former Enron CFA who is a leading proponent of the Trompe L'Shareholder style.

 

"An artist should not be afraid to be shocking," said Fastow. "As did the Modernists, we should fearlessly depart from tradition and embrace the use of innovative forms of expression. Like, say, 'Special Purpose Entities' and 'Pooling of Interests.'"

 

Sullivan, meanwhile, said he was influenced by the Flemish Masters, particularly Lernout & Hauspie, the Belgian speech recognition software company that collapsed last year after an audit discovered the firm had cooked its books in 1998, 1999, and 2000.

 

"Lernout & Hauspie simply invented sales figures, just willed them out of thin air and onto the paper," he said. "Me? I must live with a spreadsheet a long time before I begin to work it. You must be patient and wait until the numbers reveal themselves to you."

 

And what about the reaction to his work? "I realize people are angry, people are hurt. But I cannot concern myself with that," he said. "As with all true artists, I don't expect to be understood during my lifetime."

 

(The MOMA exhibit runs through Sept. 3. Admission is $8, excluding a one-time write down of deferred stock compensation and other costs associated with the carrying value of inventory.)

 

Copyright © 2002, SatireWire.

 

Investors question "Elvis," "Donald Duck," "Tupac" signatures on corporate oaths

 

CEOs Blame Rush to File for Accidentally Signing Wrong Names

 

New York, N.Y. (SatireWire.com) — While the SEC and President Bush lauded corporate executives for certifying their financial statements, investor groups poring over the pledges since the Wednesday deadline said they couldn't help but notice that nearly half the CEOs and CFOs did not appear to have signed their own names.

 

Among the nearly 700 oaths filed so far are those signed by General Motors' CEO "Elvis," energy firm Nucor's "Troilus" and "Cressida," and Merrill Lynch's chief executive "Clifford the Big Red Dog."

 

"Maybe the executives didn't understand, but the idea was that whoever's signature was on the certification would be personally liable if the company books turned out to be false," said investor advocate Jeremy Toft. "If they don't sign their own names, it kind of defeats the purpose."

 

"Oh damn," responded AOL Time Warner CEO Richard Parsons, who said he must have "accidentally" signed "Yoda" in his rush to get the forms in.

 

"Typo," added Citigroup CEO Sanford Weill, who confirmed that no one named "Capt. Jean Luc Picard" actually works for the company. Citigroup CFO "Jane Austen" could not be reached for comment.

 

While consumer advocates were skeptical of the signatures, SEC Chairman Harvey Pitt defended the submissions he has seen so far. "I've only looked at a couple of the filings, but I see here that according to WorldCom, it's run by Donald Duck and Sponge Bob. That sounds right to me."

 

However, Sen. Paul Sarbanes, who co-sponsored the bill requiring the certifications, was livid. "So if, for instance, Amgen's financials turn out to be false, shareholders are supposed to sue Cotton Mather"? he asked. "If that's the case, we'd be better off eliminating the oaths and going back to the old way."

 

"Will you sign a pledge to that effect?" replied Interpublic Group CEO John "Led Zeppelin" Dooner.

 

Copyright © 2002, SatireWire.

Paul Krugman on the ice-cream parlor model to explain business scandals

 

SYNOPSIS: In the tradition of the baby-sitting co-op and the dogs and buns model, Paul Krugman now presents the ice cream parlor model to explain the recent business scandals of Enron, Worldcom, etc.

 

So you're the manager of an ice cream parlor. It's not very profitable, so how can you get rich? Each of the big business scandals uncovered so far suggests a different strategy for executive self-dealing.

 

First there's the Enron strategy. You sign contracts to provide customers with an ice cream cone a day for the next 30 years. You deliberately underestimate the cost of providing each cone; then you book all the projected profits on those future ice cream sales as part of this year's bottom line. Suddenly you appear to have a highly profitable business, and you can sell shares in your store at inflated prices.

 

Then there's the Dynegy strategy. Ice cream sales aren't profitable, but you convince investors that they will be profitable in the future. Then you enter into a quiet agreement with another ice cream parlor down the street: each of you will buy hundreds of cones from the other every day. Or rather, pretend to buy — no need to go to the trouble of actually moving all those cones back and forth. The result is that you appear to be a big player in a coming business, and can sell shares at inflated prices.

 

Or there's the Adelphia strategy. You sign contracts with customers, and get investors to focus on the volume of contracts rather than their profitability. This time you don't engage in imaginary trades, you simply invent lots of imaginary customers. With your subscriber base growing so rapidly, analysts give you high marks, and you can sell shares at inflated prices.

 

Finally, there's the WorldCom strategy. Here you don't create imaginary sales; you make real costs disappear, by pretending that operating expenses — cream, sugar, chocolate syrup — are part of the purchase price of a new refrigerator. So your unprofitable business seems, on paper, to be a highly profitable business that borrows money only to finance its purchases of new equipment. And you can sell shares at inflated prices.

 

Oh, I almost forgot: How do you enrich yourself personally? The easiest way is to give yourself lots of stock options, so that you benefit from those inflated prices. But you can also use Enron-style special-purpose entities, Adelphia-style personal loans and so on to add to the windfall. It's good to be C.E.O.

 

There are a couple of ominous things about this menu of mischief. First is that each of the major business scandals to emerge so far involved a different scam. So there's no comfort in saying that few other companies could have employed the same tricks used by Enron or WorldCom — surely other companies found other tricks. Second, the scams shouldn't have been all that hard to spot. For example, WorldCom now says that 40 percent of its investment last year was bogus, that it was really operating expenses. How could the people who should have been alert to the possibility of corporate fraud — auditors, banks and government regulators — miss something that big? The answer, of course, is that they either didn't want to see it or were prevented from doing something about it.

 

I'm not saying that all U.S. corporations are corrupt. But it's clear that executives who want to be corrupt have faced few obstacles. Auditors weren't interested in giving a hard time to companies that gave them lots of consulting income; bank executives weren't interested in giving a hard time to companies that, as we've learned in the Enron case, let them in on some of those lucrative side deals. And elected officials, kept compliant by campaign contributions and other inducements, kept the regulators from doing their job — starving their agencies for funds, creating regulatory "black holes" in which shady practices could flourish.

 

(Even while loudly denouncing WorldCom, George W. Bush is trying to appoint the man who drafted the infamous "Enron exemption" — a law custom-designed to protect the company from scrutiny — to a top position with a key regulatory agency. And some congressmen seem more interested in clamping down on New York's attorney general, Eliot Spitzer, than in doing something about the corruption he has been investigating.)

 

Meanwhile the revelations keep coming. Six months ago, in a widely denounced column, I suggested that in the end the Enron scandal would mark a bigger turning point for America's perception of itself than Sept. 11 did. Does that sound so implausible today?

 

Originally published in The New York Times, 6.28.02

 

Financial Media Expressions And What They Really Mean

 

March 19, 2002

WALL STREET JOURNAL

GETTING GOING By JONATHAN CLEMENTS

 

Cigarettes come with health warnings. Maybe financial journalists should, too.

 

In recent years, I have done a handful of columns where I took phrases frequently heard on Wall Street and then offered my translation for what those comments really mean. Along the way, I have poked fun at brokers, market strategists, money managers and ordinary investors.

 

But why stop there? Often, financial journalists also fail to say what they really mean. Examples? Consider the 25 comments below, variations of which often appear in the media. The list was put together with help from investment experts William Bernstein, Kevin Bernzott, Meir Statman and Alan Weiss.

 

"The banking community is divided": We called two sources and got different opinions.

 

"A spokesman for the state securities commission declined to comment, citing its ongoing investigation": Which got started when we called the agency and asked whether investigators were looking at the issue.

 

"Ms. Smith, who isn't involved in the lawsuit, says the late-day announcement is good news for the plaintiff": We were on deadline, and nobody was picking up the phone, so we called Ms. Smith instead.

 

"A company spokeswoman declined to comment": But off the record, we got an earful from the executive vice president.

 

"Experts are still trying to untangle the legal issues involved": We talked to three lawyers, and we still don't understand what's going on.

 

"The euro set new lows for the session on signs of a U.S. economic rebound": We haven't the slightest inkling what the connection is between the euro and the U.S. economy. But there has to be some explanation for the currency's tumble.

 

"Stocks are expected to open lower on Monday": Sure, we're right only half the time. But Sammy Sosa would kill for that sort of batting average.

 

"Considered one of Wall Street's most iconoclastic strategists, Mr. Wharton predicts the Dow Jones Industrial Average will plunge below 5000": Sure, the guy is off his rocker. But he makes great copy.

 

"Bond prices fell in anticipation of higher interest rates": Or maybe interest rates rose in anticipation of lower bond prices. How could we possibly know? We majored in English.

 

"Many investors fear there's more stock-market carnage to come": Everybody in the newsroom is totally freaked out.

 

"Want to become a millionaire? Try our five-step program": With enough time, a high savings rate and outsize investment returns, we can assume our way to anything.

 

"Looking for big gains in the year ahead? Here are seven stocks that are set to sizzle": Reader amnesia is our best friend.

 

"While many small investors have suffered big losses recently, few can rival the dismal record of Mr. Warren, who owns just three stocks -- Kmart, Enron and Global Crossing": Can you believe this guy agreed to speak to us? It's amazing what people will tell the press.

 

"Jim and Betty Hancock, shown in the accompanying photograph, began diligently saving for college soon after their first child was born": Actually, the Hancocks seem to spend most of their spare time at the local mall. But they sure photograph well.

 

"Like thousands of other investors, Wendy Evans was badly burned by last month's partnership debacle": You wouldn't believe how many calls we had to make and how many Internet bulletin boards we had to scour before we found this woman.

 

"Here are our 10 funds to buy now": One will be a great performer, seven will be mediocre and two will be total dogs. But which is which? You will have to figure that out on your own.

 

"See our list of last year's top-performing mutual funds": Which may be useful if you are the kind of person who drives using only the rearview mirror.

 

"Many investors ignore costs when picking mutual funds. But that can be a big mistake": First, we make an unsubstantiated claim about investor behavior. Then, we argue that these folks are foolish. Ah, sometimes there's no sweeter scent than a straw man burning.

 

"Indeed, if you had blindly bought into the prior year's hottest sector, you wouldn't have made any money over the past decade, once you figure in inflation, taxes and trading costs": We tortured the data base until it confessed.

 

"The fund's risk-adjusted performance is among the best in the growth-and-income category": Its raw performance stinks.

 

"Despite the fund's dazzling record, analysts say it should account for only a small portion of your portfolio": If you stick any money in this fund, don't blame us.

 

"The fund's recent performance reads like a chapter out of a Stephen King novel": When we were kids, we used to pull the legs off spiders.

 

"Last quarter's top-performing fund manager thinks further gains lie ahead": Remember what we said about ignoring short-term performance? Scratch that.

 

"The fund's manager avoids swinging for the fences, instead aiming to hit singles and doubles": Maybe the sports page has some openings.

 

"Today's boardroom Sturm und Drang left many observers with a sense of déjà vu": And if the foreign editor asks, tell her our Italian is also pretty good.

 

If you hold any of the following stocks, you may want to review your portfolio:

- American Can Co

- Interstate Water Co.

- National Gas Co.

- Northern Tissue Co.

 

Due to the uncertain market conditions, at this present time, we advise you to sit tight on your American Can, hold your Water, and get rid of your Gas.

 

You may be interested to know that Northern Tissue touched a new bottom today, and millions were wiped clean.

 Are you interested in making $$$$ fast? Here's an incredibly simple way to do it, and there is nothing to buy, no investment to make, no money to lose! Try it now!

 

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Screenplay for the upcoming movie "A few good auditors"

 

[Warning: See "A Few Good Men" first ....]

 

INTERIOR: Securities and Exchange Commission Hearing Room.

 

DOJ Attorney (Cruise) standing in well of courtroom, Andersen Auditor David Duncan (Nicholson) is seated in the witness box.

 

DOJ Attorney approaches witness box...

 

Tom Cruise: "Did you order the shredding?"

Jack Nicholson: "You want answers?"

Tom Cruise: "I think I'm entitled."

Jack Nicholson: "You want answers!"

Tom Cruise: "I want the truth!"

Jack Nicholson: "You can't handle the truth! Son, we live in a world that has financial statements. And those financial statements have to be audited by men with calculators. Who's gonna do it? You? You, Department of Justice?

 

I have a greater responsibility than you can possibly fathom. You weep for Enron and you curse Andersen. You have that luxury. You have the luxury of not knowing what I know: that Enron's death, while tragic, probably saved investors. And my existence, while grotesque and incomprehensible to you, saves investors. You don't want the truth. Because deep down, in places you don't talk about at parties, you want me on that audit. You need me on that audit!

 

We use words like materiality, risk-based, special purpose entity. . . We use these words as the backbone to a life spent auditing something. You use 'em as a punchline. I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very assurance I provide, then questions the manner in which I provide it. I'd prefer you just said thank you and went on your way. Otherwise, I suggest you pick up a pencil and work on an audit. Either way, I don't give a damn what you think you're entitled to!!"

 

Tom Cruise: "Did you order the shredding?"

Jack Nicholson: "You're damn right I did!"

 

FADE TO BLACK.

A Primer on Creative accounting

 

 Courtesy -- Mark Perlmutter of the MicroAngels Network

 

A city boy, Andy, moved to the country and bought a donkey from an old farmer for $100. The farmer agreed to deliver the donkey the next day. The next day the farmer drove up and said, "Sorry son, but I have some bad news, the donkey died." Andy replied, "Well then, just give me my money back." The farmer said, "Can't do that. I went and spent it already." Andy said, "OK then, at least give me the donkey."

 

The farmer asked, "What ya gonna do with him?" Andy, "I'm going to raffle him off." The farmer said, " You can't raffle off a dead donkey!" Andy replied, "Sure I can. Watch me. I just won't tell anybody he is dead." A month later the farmer met up with Andy and asked, "What happened with that dead donkey?" Andy, "I raffled him off. I sold 500 tickets at two dollars a piece and netted a profit of $898."

 

The farmer asked, "Didn't anyone complain?" Andy responded, "Just the guy who won. So I gave him his two dollars back."

 

An honest crypto-currency

 

It says on the website "Seriously, don't buy these tokens...You're literally giving your money to someone on the internet and getting completely useless tokens in return."

 

And yet they sold $350,000 of them that have appreciated by more than 240% over the three months after launch!