Glickenhaus and Company Hits a New Low

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Financial investing always involves risk. The key to a good investment is good research. The youngest in the Glickenhaus family business, Jesse(29), invested in a Beijing based natural fertilizer producer(China Agritech). It turns out this company had been reporting false information. The article tells us that those who were against the new 2% stake in China Agritech attacked Glickenhaus & Co. saying that China Agritech was a scam all along. This investment was clearly a mistake and as the article explains, Jesse learned a vital business lesson. If I were to instruct him on investing, I would go through the generally accepted accounting principles. GAAP is what all accountants must follow when submitting financial statements. They must make their statements relevant to help the user understand the firms financial performance and condition. When reading this, you can get a good idea if you are attracted to the company or not as an investor. These statements must also be reliable in that they must provide information that is objective, accurate, and verifiable. Jesse failed to do his research in this category, unfortunately. Accountants must also be consistent in their statements. Inconsistencies make an investor make conclusions the company doesn’t want them too. Consistency shows legitimacy. In China Agritech’s 2009 statement, false numbers were submitted. In 2010, false information was submitted again. China Agritech shows inconsistency which should have raised a reg flag to Jesse. When investing, you compare companies to see which one(s) you want to put your money in. Accountants must present statements in a standardized way so that anybody coming to read the statements can do so. If a company is not presenting a standardized style of statements, there could be some false information represented which symbolizes risk. Investors don’t like risk but clearly Jesse too his chances and wrongly invested $4 million.

GAAP can be used by accountants however, the...
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