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

ISBN: 978-0-470-52653-8
224 pages
July 2009
How to Smell a Rat: The Five Signs of Financial Fraud (047052653X) cover image

Description

A timely guide to uncovering financial fraud

2008 and 2009 will be remembered for bear markets, a global credit crunch, and some of the largest investment scams ever. But these scams are nothing new, they've been repeated throughout history, and there will certainly be more to come. But the good news is fraudsters often follow the same basic playbook. Learn the playbook, and know how to ask the right questions, and financial fraud can be easy to detect and simple to avoid.

In How to Smell a Rat, trusted financial expert Ken Fisher provides you with an inside's view on how to spot financial disasters before you become a part of them. Filled with in-depth insights and practical advice, this reliable resource takes an engaging look at recent and historic examples of fraudsters, how they operated, and how they can be easily avoided. Fisher also shows you the quick, identifiable features of financial frauds and arms you with the questions to ask when assessing a money manager.

  • Prepares you to identify and avoid financials cams that could instantly destroy your wealth
  • Contains examples that highlight how financial frauds are committed
  • Provides questions everyone should ask before entering any investment endeavor

With How to Smell a Rat as your guide, you'll learn how to protect your interests and assets from unnecessary losses.

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Table of Contents

Acknowledgments.

Introduction.

Chapter 1: Good Fences Make Good Neighbors.

Chapter 2: Too Good To Be True Usually Is.

Chapter 3: Don't Be Blinded by Flashy Tactics.

Chapter 4: Exclusivity, Marble, and Other Things That Don't Matter.

Chapter 5: Due Diligence Is Your Job, No One Else's.

Chapter 6: A Financial Fraud-Free Future.

Appendix A: Asset Allocation - Risk & Reward.

Appendix B: Same But Different—Accounting Fraud.

Appendix C: Minds that Made the Market.

Notes.

Index.

About the Authors.

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Author Information

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 MarketMinder.com. She also coauthored with Ken Fisher the bestsellers The Only Three Questions That Count and The Ten Roads to Riches.

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Reviews

With five straightforward rules that would have saved any investor from Bernie Madoff, investment firm CEO and Forbes columnist Fisher (100 Minds That Made the Market) gives readers a secure plan for fraud-proof investing, worthwhile for novices and sophisticated financiers alike. Using the example of everyman “Jim,” a precarious investor navigating shark-filled waters, Fisher presents a clear, fast-paced, tightly organized guide to principles like “Too good to be true usually is,” and “Due diligence is your job, no one else's.” Fully-referenced data, insider details, laser-focused statistical digressions, and the finer points of practical investing keep pages turning. Readers will value the practical, easy-to-follow models of solid, transparent investment strategies and examples from Fisher's experiences as CEO of his own investment firm. Fisher also includes suggestions for further reading and appendices that reproduce previously-published comparisons of different asset allocations, information for small business owners and short biographies of market-movers. Much more than what to avoid, Fisher’s concise guide should be highly illuminating and confidence-building for anyone with a bank account. (Aug.) Starred review (Publishers Weekly, September 2009)

Using well-known examples from recent headlines like Bernard Madoff and R. Allen Stanford along with a bevy of historical scam artists, Fisher details the red flags that should alert investors. They are: advisers who have access to your money; promises of returns that are too good to be true; mumbo-jumbo that takes the place of explaining investing strategy; fake benefits like exclusivity, and relying on someone else for due diligence. (Associated Press)

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Press Release

September 17, 2009
How To Smell a Rat: The Five Signs of Financial Fraud

As Ken Fisher watched the news coverage of Bernard Madoff’s unraveling Ponzi scheme, he was struck by what the media seemed to always miss when reporting on such scams.  Fisher Investments’ CEO Ken Fisher, who’s been managing money for individuals and institutions for over 30 years, has identified key traits shared by perpetrators of virtually every major financial fraud through history—from Charles Ponzi to Bernard Madoff.  Had the embezzled clients known the traits and how to look for them, they could have avoided falling victim to Madoff and any similar con artist. Ken Fisher, a New York Times bestselling author and writer of one of Forbes’ longest-running columns, “Portfolio Strategy,” knew then there was a book to be written – a book he would write -- to help investors protect themselves from financial predators.

Some financial advisers start with the intention to embezzle. Others evolve to it—as Madoff claims. Either way, it’s structurally the same.  In How to Smell a Rat: Five Signs of Financial Fraud (Wiley; August 2009; $24.95; Hardcover), trusted financial expert Ken Fisher provides readers with an insider’s view on how to spot potential financial disasters before committing money to a scam. 

The book takes an engaging look at both recent and historic examples of fraudsters, how they operated, and how they could have been easily avoided. Ken Fisher then shows readers quick, identifiable features of potential financial frauds and arms readers with questions to ask when assessing money managers.

How to Smell a Rat can enable readers to be better prepared to identify and avoid financial scams that could instantly destroy the wealth they’ve worked so hard to build.

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