After writing yesterday’s issue on the Enron Saga, I realized it might be helpful if I shared some of the red flags that can alert investors to corporate fraud. So I’ve put together a list of ten different possible pitfalls – what they mean, and how to spot them. Armed with this list, you’ll be much better prepared to pick the right investments.

It’s important to do your own due diligence on your investments – because ultimately, only you are responsible for your success or failure. And I know today’s issue is a little long – but I urge you to read it all the way to the end. It just might save you a bundle by helping you avoid losses down the road. 

The good news is that you don’t need an advanced accounting degree to master some of the basics of financial analysis. It is very productive to (1) know how manipulation takes place, (2) identify the trends showing that something manipulative is going on, and (3) understand the questions to ask.

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