The American Spectator

I just wrote a book titled The 5 Minute Investor. The book explains how, with very little effort, investors can do the research to protect themselves from “surprise” business collapses like Enron and Lucent. Conversely, in this environment where every company is seemingly under suspicion, these same techniques allow investors to separate the bargains from the disasters-in-waiting.

It is not my goal to promote the book (though it is reasonably priced and available at your local bookstore as well as Amazon.com and Barnesandnoble.com). One of my favorite parts of the book, and the reason I bring it up, is the page of quotations at the beginning. Amid quotes from real and fictitious luminaries like Yogi Berra, Alice in Wonderland, and Gordon Gekko, is one from yours truly:

p> em>Fool me once, br> Shame on you. br> Fool me twice, br> Shame on me. br> Fool me three times — br> Wait, what were we talking about? /em> /p>

The capacity of the American investor to get snookered is limitless. And I’m not just talking about us last-to-know suckers 2,000 miles from Wall Street. The mutual fund and pension guys have been the biggest losers during the fall of so many high fliers over the past few years.

Part of the problem is that everybody thinks the corporate crisis is nearly past. Sure, there may be more revelations, but that’s all “old business.” Jack Welch is giving back his perks. The departing CEO of Dollar General just volunteered to give back performance bonuses he received due to improper accounting. Dennis Kozlowski and his ilk at Tyco International are standing before the dock. Now we can get back to the business of making money.

Not so fast, sucker. Look at Tyco, that conglomerate of 1,000 acquisitions in 10 years, as a proxy of that big, bad, crooked world we believe that the sunshine of disclosure will chase away, as if Kozlowski was Nosferatu.

The stock market is ebullient about Tyco’s prospects. Once trading as high as $60 per share (with a market capitalization of $120 billion), Tyco fell below $9 per share last July on the resignation and indictment of former CEO Kozlowski and the resignation of CFO Mark Swartz and general counsel Mark Belnick. The company’s strategic quagmire, first making all those acquisitions, then reversing course and planning four spin-offs, then reconsidering that, then flip-flopping on the spin-off or sale of recently-acquired CIT, left stunned investors racing for the exits.