How to Smell a Rat: The Five Signs of Financial Fraud

How to Smell a Rat: The Five Signs of Financial Fraud

by Kenneth L. Fisher, Lara W. Hoffmans


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Product Details

ISBN-13: 9780470526538
Publisher: Wiley
Publication date: 07/27/2009
Series: Fisher Investments Press Series
Pages: 224
Product dimensions: 6.20(w) x 9.10(h) x 0.90(d)

About the Author

KEN FISHER is best known for his prestigious "Portfolio Strategy" column in Forbes magazine, where his twenty-five-year tenure of high-profile calls makes him the fourth longest-running columnist in Forbes' 90-plus-year history. Ken is the founder, Chairman, and CEO of Fisher Investments, an independent global money management firm. He is on Investment Advisor magazine's prestigious IA-25 list of the industry's most influential people; is the award-winning author of numerous scholarly articles; and has published five previous books, including the New York Times bestsellers The Only Three Questions That Count and The Ten Roads to Riches—both of which are published by Wiley. Ken has been published, interviewed, and/or appeared in most major American, British, and German finance or business periodicals. He has a weekly column in Focus Money, Germany's leading weekly finance magazine.

LARA HOFFMANS graduated from the University of Notre Dame with a BA in theatre. She is a content manager at Fisher Investments and contributing editor of She also coauthored with Ken Fisher the bestsellers The Only Three Questions That Count and The Ten Roads to Riches.

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Table of Contents

Acknowledgments vii

Introduction 1

Chapter 1: Good Fences Make Good Neighbors 11

Chapter 2: Too Good to Be True Usually Is 39

Chapter 3: Don’t Be Blinded by Flashy Tactics 63

Chapter 4: Exclusivity, Marble, and Other Things That Don’t Matter 87

Chapter 5: Due Diligence Is Your Job, No One Else’s 111

Chapter 6: A Financial Fraud–Free Future 137

Appendix A: Asset Allocation—Risk & Reward 153

Appendix B: Same but Different—Accounting Fraud 157

Appendix C: Minds That Made the Market 161

Notes 195

Index 203

About the Authors 209

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How to Smell a Rat: The Five Signs of Financial Fraud 4.2 out of 5 based on 0 ratings. 12 reviews.
Anonymous More than 1 year ago
Great book. Very useful, easy to read, actually funny in parts.
RogerC1968 More than 1 year ago
Picked this up at an airport and it kept me engrossed through my flight. With all the news about Madoff, it's easy to worry about who is and who might be the next Ponzi guy. But this book makes it very easy to do the right kind of due diligence. I also appreciated the historic examples and anecdotes. Who knew Joe Kennedy was such a chicken thief? Apparently FDR!
MWalters More than 1 year ago
This book was excellent, to the point, and will be invaluable to me. I am taking it with me next Thursday when I am having a meeting with a possible money manager. I'm opening it a page 36 and asking those questions and checking his answers. Thanks to this book I will not be scammed.
RolfDobelli More than 1 year ago
The unlamented year of 2008 was a terrible time for investors. The news that money wizard Bernie Madoff stole some $65 billion from his investment clients with a giant pyramid scheme added insult to injury. Though already in his 70s, Madoff received a 150-year prison sentence for his thievery. Many felt the punishment was too light. The world is full of crooks and charlatans like Madoff. Fortunately for investors, they often give themselves away if you know how to spot them. In this savvy manual, business journalist Ken Fisher (writing with investment expert Lara Hoffmans) details five warning signs that can reveal crooks posing as financial advisers. getAbstract recommends this book to investors who are suspicious and to those who ought to be.
PFS65 More than 1 year ago
Picked this up just because the title seemed intriguing. Glad I did. I've retained some very valuable lessons on avoiding those situtaions that have the potential to end up like another Madoff. Besides the useful tips it was a snappy read, enjoyable and even funny. Glad I read it, and I recommend it highly.
KLmesoftly on LibraryThing 25 days ago
I'm not so much interested in investment banking as fraud, but this book was interesting anyway. It's really obvious that Fisher is a magazine columnist first, author second, because the book was subdivided into small sections and repeated itself regularly the way listicle writers seem to. Most of these lessons were ones anyone could learn watching an episode of Leverage (¿), though, so I'd recommend two or three other books on fraud/theft/counterfeiting before this one.
Anonymous More than 1 year ago
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Stemline More than 1 year ago
If this book were required reading in high school or college, loads of scamsters would be out of business. It is easy to follow and tells you exactly what you need to know to avoid most frauds.
Anonymous More than 1 year ago
A good read for those who want to know how to avoid being wrong.
Anonymous More than 1 year ago
Well it is now official, as confirmed by data released by Federal prosecutors on September 22, 2009: clients of Fisher Investments lost more money in 2008 than Bernie Madoff's clients lost in the entire last 30 years! Even more ironic is that the 30 year time frame cited by the Feds covers the exact span of time since Fisher Investments was founded in 1979. According to the Associated Press: "The government said a search of financial records, including microfilm records dating back to 1979, show that investors suffered net losses exceeding $13 billion." In 2007, Fisher Investments went on a major acquisition spree to beef up their assets under management (AUM) issuing press releases one after another in which they bragged about their AUM growth which topped $45 billion at the end of 2007. Well, I just checked the latest update to the Fisher Investments SEC registration dated July 2009 (you can look up any SEC-registered advisor on the SEC website) and Fisher's AUM is now slightly more than $28 billion, down $17 billion from the beginning of 2008! Fisher runs an equity portfolio strategy that emphasizes large cap stocks with a heavy emphasis on global and international companies that they call Global Total Return which was down about 43% last year according to several of their clients. Ken Fisher's recently published book entitled, "How to Smell a Rat: The Five Signs of Financial Fraud" offers some genuinely useful advice on potential red flags such as independent advisors that act as custodians for their clients' assets. If you have a brokerage account at any major discount broker, full-service broker, bank, or investment bank and that account is managed by an independent investment advisor then Madoff-style theft is nearly impossible because those brokerages and banks have safeguards in place to prevent a loss of your funds due to theft. The gaping hole in Fisher's book and in a lot of literature produced by investment advisors is the lack of transparency with respect to their historical performance. Most advisors make scant mention of their historical performance, if they mention it at all, and often go to great lengths to avoid disclosing their performance. Part of this is likely because the SEC rules regarding the advertising of performance are so strict that even top performing advisors may choose not to prominently distribute their performance for fear of running afoul of SEC rules. However, it is also true that a great number of advisors simply have poor performance.
Anonymous More than 1 year ago