How to perform Beneish M Model

RandomInvestor said:

Ah yeah! Thats what I was thinking about when duck wrote that, but didnt write it because something didn't make sense. But yeah you're right lol. But with what you just said I am trying to say something but don't know to say it like I think its this, that you get those numbers at face value and through the the beneish model see if there is manipulation. But this is same as what I said before.

I don't know what is accurate or what is manipulated that's what I am trying to find out and having no luck. My learning of value investing seems at its end lol.

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Don't give up dude.

Investing is not as difficult as it sound. That's not to say it's easy. But there are much harder ways of making money to pay those bills.

Klogg said:

You do realise you've quoted the person who very likely has the best record on this forum (there may be a few I'm not aware of that have better performance in terms of CAGR). People would bend over backward to replicate his success and his methods, and you've cherry-picked one post to suit your views.

Please tell me, what is the performance of your portfolio like? (CAGR since inception will do)


As an aside - I have to say I got this wrong (VOC). I did factor in some risk with the acquisition, but I didn't think it would be to this scale. That said, historically I've been right approximately 70% of the time (from memory - I did a review of this not long ago) and it gives some fairly good returns (20%+ per annum). I have to take the wrong with the right, because that's what this particular framework demands. If I choose at a later point to try my hand at technical analysis, then I'll make my decisions purely on this.

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I am aware of the quality of of craft but I have used that page of that thread as a starting point and that post because of the comment that referred to MY non existent list of failed stocks.

Post #143 is also a good starting point because it was followed by post #144 which was probably the most accurate post on the whole thread.

Are you suggesting that I cannot copy and use a post where I am mentioned because the poster "has the best record on this forum".

Don't be offended because you got it wrong, nobody gets it right all the time and the reference to VOC is not having a go at those who struggle with a loss, it is simply an effort to demonstrate to the OP that sometimes the theory and reality don't align and when they don't then sit on hands rather than blindly believing what is published.

luutzu said:

naughty boggo. Can't call the lord's name in vain like that.

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I so baaad

Boggo said:

I am aware of the quality of of craft but I have used that page of that thread as a starting point and that post because of the comment that referred to MY non existent list of failed stocks.

Post #143 is also a good starting point because it was followed by post #144 which was probably the most accurate post on the whole thread.

Are you suggesting that I cannot copy and use a post where I am mentioned because the poster "has the best record on this forum".

Don't be offended because you got it wrong, nobody gets it right all the time and the reference to VOC is not having a go at those who struggle with a loss, it is simply an effort to demonstrate to the OP that sometimes the theory and reality don't align and when they don't then sit on hands rather than blindly believing what is published.

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I'm definitely not offended. I'm far from perfect, so I expect to make some mistakes.

Theory and reality don't always align, agreed. But if my investment decisions are made based on the performance of a business, and I then change that decision to be based on share price movements, will this give me a better or worse performance overall?

Sure, in this particular case had I followed the technical analysis, I would have been in a better position than current. But if I did that in every case, would the same have occurred? I have to pick my investment method and stick with it, so I need a statistical set that is far greater than one...
This is the reason I compare overall results (CAGR in this case, as it's a starting point for this), because that's what really matters.

I'm only challenging what you wrote because you used that quote as a basis for stating that people should have followed TA. In this case, it panned out that way, but as I mentioned above, one result is not enough to prove or disprove this method of investing.

Because of the lack of data points to show the overall result (i.e. one data point, being the VOC investment) I would even argue that it's borderline irresponsible to suggest that this investment method is not worthwhile to someone who is still very early on in the learning process.

Klogg said:

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I'm only challenging what you wrote because you used that quote as a basis for stating that people should have followed TA. In this case, it panned out that way, but as I mentioned above, one result is not enough to prove or disprove this method of investing.
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Wrong, wrong, I am not saying that anyone should have followed TA, I am simply saying that where there are discrepancies, different opinions, inconsistent reports and mixed opinions among quality posters then there is a fall back and that is a quick glance at the chart to see what is really happening.
In the case of VOC from late Aug to early Sept 2016... you work it out.

Boggo said:

The flaw I refer to is what tech/a highlighted in post #24, ie, in your original post you are attempting to find data to input in the formulae "to check if the company is manipulating their earnings".
If they are manipulating their earnings wouldn't that also imply that all of the data items you are attempting to input would likely be manipulated too ?

How do you know what are accurate or what is also "manipulated".

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That the underlying data itself is 'manipulated' itself isn't necessarily relevant for this formula.

The formula itself measures divergence in ratios calculated at Point A (usually year 1) and Point B (usually year 2).

The theory is that increasing levels of divergence from one period to the next increases the probability that there could be earnings manipulation. Clearly, this calculation is not generally completed as a stand-alone exercise.

Just to lighten the mood

A fundamentalist would want to know what is wrong with the drain system.
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A tech analyst would want to know who built the fence

Boggo said:

Wrong, wrong, I am not saying that anyone should have followed TA, I am simply saying that where there are discrepancies, different opinions, inconsistent reports and mixed opinions among quality posters then there is a fall back and that is a quick glance at the chart to see what is really happening.
In the case of VOC from late Aug to early Sept 2016... you work it out.

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Going by the bolded statements, aren't they the same thing? You're saying not to use TA, but to fall back to TA.

Klogg said:

Going by the bolded statements, aren't they the same thing? You're saying not to use TA, but to fall back to TA.

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There's no Analysis in glancing at a chart to see that it is on a 45 degree angle downwards.
You don't have to be a meteorologist to see on a weather map that it is likely to rain tomorrow.

luutzu said:

naughty boggo. Can't call the lord's name in vain like that.

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Boggo said:

I so baaad

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What a pair of....

I wouldn't trade places with either of you - and that doesn't require even a millisecond of thought.

Tech, In relation to the thread topic

You brought up complexity - A spreadsheet or computer program could calculate the whole market instantly - so its neither complex or time consuming.

What's it good for? -- Same sort of thing a divergence indicators is good for! A heads up.

Neither is needed once you a have a more in depth understanding - you will see all you need and more fully in the raw data, but both useful in their respective ways early on/scanning.

craft said:

What a pair of....

I wouldn't trade places with either of you - and that doesn't require even a millisecond of thought.

...

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That was at least a couple of milliseconds of thought. Can't be sure as I haven't done a DCF but it definitely isn't less than 1mmsec.

Come on craft, we weren't insulting you. Boggo wasn't anyway