Window Dressing

When quarter-end rolls around, everybody wants to make things look nice. But new flowers in the window boxes can’t disguise rot that may be in the window casings.

At quarter-end, many public companies try to dress up their financials. They increase the amount of cash on hand, or pump up sales to show a better financial statement. Even blue-chip companies get caught in this trap.

Gillette is famous for having “stuffed” their customers with product by moving cases from one warehouse to another. When Warren Buffet showed up at noon one quarter-end he asked the loading dock foreman how it was going. The man replied that he couldn’t say, since by noon the quarter was only half over!

And that’s the lesson. Diligent investors look beyond the headline number to what’s going on inside a company. Channels may get stuffed, but the imbalance shows up somewhere else. They may be boring, but some of the juiciest tidbits in corporate America are buried in the financials.


Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-03T19:52:13+00:00 June 25th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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