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

Ken Fisher (Author), Lara Hoffmans (Author)

Book Description

Publication Date: July 27, 2009

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.

Editorial Reviews

From Publishers Weekly

Starred Review. 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.

Review

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)

See all Editorial Reviews

Product Details

• Hardcover: 209 pages
• Publisher: Wiley (July 27, 2009)
• Language: English
• ISBN-10: 047052653X
• ISBN-13: 978-0470526538
• Product Dimensions: 9.2 x 6 x 0.8 inches
• Shipping Weight: 13.6 ounces (View shipping rates and policies)
• Average Customer Review: 4.2 out of 5 stars  See all reviews (23 customer reviews)
• Amazon Best Sellers Rank: #617,871 in Books (See Top 100 in Books)

More About the Author

Ken Fisher: CEO of Fisher Investments

Ken Fisher is founder, Chairman and CEO of Fisher Investments, an independent money management firm managing tens of billions of dollars. Fisher Investments serves large pension plans, endowments, and foundations globally. The Fisher Investments Private Client Group serves tens of thousands of high net worth individuals and is often characterized by third parties as one of the world's largest independent registered investment advisors serving high net worth individuals.

Ken Fisher: Forbes Columnist

Ken Fisher is best known for his over 25 years as Forbes' Portfolio Strategy columnist--the fourth longest running columnist in Forbes history. Third-party research firm, CXO Advisory Group's "Guru Grades" ranks Fisher as one of the most accurate stock market forecasters over recent years.*

Ken Fisher: Bestselling Author

Ken Fisher has written seven books on investing and personal finance, three of which were New York Times bestsellers. His 2010 book, Debunkery (John Wiley & Sons) is available now. His 2009 book, How to Smell a Rat (John Wiley & Sons) was a New York Times and Wall Street Journal best seller. His 2008 book The Ten Roads to Riches (John Wiley & Sons) made New York Times, Wall Street Journal, USA Today and Business Week bestseller lists. His 2006 book The Only Three Questions That Count (John Wiley & Sons) made New York Times, Wall Street Journal, and Business Week bestseller lists. Other books include 1984's Super Stocks, 1987's The Wall Street Waltz, and 1993's 100 Minds That Made the Market. Ken Fisher's books have been translated into 9 languages, reaching over two-thirds of global GDP.**

Fisher Investments Press

Ken Fisher's firm, Fisher Investments, embarked on a publishing imprint with John Wiley & Sons in 2007, focusing on investing-related topics. Titles published under the imprint, Fisher Investments Press, so far include 20/20 Money and Own the World and the Fisher Investments On series, which focuses on standard investing sectors and other categories. Titles published so far include Fisher Investments on Energy, Fisher Investments on Materials, Fisher Investments on Industrials, Fisher Investments on Consumer Staples, and Fisher Investments on Emerging Markets.

Other Ken Fisher Contributions

Ken Fisher has been published, interviewed and/or been written about in many major American, British, Canadian, German and Swiss finance or business periodicals. Fisher has been on the Forbes 400 list of richest Americans and the Forbes Global Billionaire lists since 2005. Ken Fisher is also on Investment Advisor magazine's prestigious IA-30 list of the 30 most influential people in and around money management over the last 30 years.

Customer Reviews

Most Helpful Customer Reviews

70 of 77 people found the following review helpful:

3.0 out of 5 stars Very Basic -, August 4, 2009

By 

Loyd E. Eskildson "Pragmatist" (Phoenix, AZ.) - See all my reviews
(HALL OF FAME REVIEWER)    (REAL NAME)   

This review is from: How to Smell a Rat: The Five Signs of Financial Fraud (Hardcover)

Fisher offers five signs of potential financial fraud. The good news is that they seem useful, and the book's an easy read; the bad news is that the book could have been shortened to a page. The rules are: 1)Never hire any form of money manager or advisor who takes custody of your assets. That is the #1 biggest, reddest flag. (What about mutual funds - they take custody of your assets?) 2)Returns are consistently great - almost too good to be true. Bad years indicate integrity, says Fisher; schemers don't want complaints or reasons for investors to redeem their money. 3)The investing strategy isn't understandable, "too complicated" for him to describe so you can easily understand. 4)Your advisor promotes benefits like exclusivity - eg. secrecy, lack of advertising or bragging. Or he tries to make it sound difficult to get into - need to know somebody. 5)You didn't do your own due diligence.

I would add another criterion - don't buy anything sold by salesmen on commission. While perusing this book at a store I overhead a securities salesman talking to a friend about the money he was making selling securities, while bragging that his knowledge was limited. Scandalous!

22 of 23 people found the following review helpful:

5.0 out of 5 stars This is a well-written, useful book for the average investor, August 26, 2009

By 

Tax Accountant "Tax Accountant" (Nevada) - See all my reviews

This review is from: How to Smell a Rat: The Five Signs of Financial Fraud (Hardcover)

For those reviewers who said this book was "simplistic"-- they were right! This bok is "simple" to UNDERSTAND, that is! Which means you'll read it. And, unlike some of the other dry financial books out there, you'll actually get some useful information that really can prevent you from getting scammed.

Remember those old "Fight Back" shows? This book reads like THAT. It's fast paced, funny, and the author has really tried to make the book easy to digest for the average person. I liked it. The ideas are sound, and I think that the main goal of the book was to warn people how NOT get taken by a fraudster. In this respect, the book succeeds admirably.

Now, a word of caution. If you are a financial professional, you might find the book a bit simplistic. But I doubt the author was writing for CPAs. This book is for everyone else.

There were a few points that I thought the author could have covered a little better, but overall, the book is a fun read, and it's worth the purchase price. Recommended.

12 of 12 people found the following review helpful:

5.0 out of 5 stars No Longer Fearful!, August 11, 2009

By 

Ellis Emery (San Francisco, USA) - See all my reviews

This review is from: How to Smell a Rat: The Five Signs of Financial Fraud (Hardcover)

Thankfully I've never been duped (knock on wood) out of my hard earned investments and I can only express sympathy to those who have. However, if you asked me to come up with a sure fire way to sniff out individuals with nefarious intentions I could come up with maybe one or two. I believe most people would say the exact same thing. However, Ken Fisher and Lara Hoffmans provide FIVE key traits, which I believe help uncover the entire gamut of possibilities that unscrupulous investment firms design to grift money from honest and hard working investors.

This book is invaluable and straightforward. It was incredibly easy to understand and is written in a way that any everyday investor can understand. This book doesn't try and masquerade as anything other than a deeply honest and telling account of the financial scandals that occurred over the last 2 years.

Anyone looking to avoid being misled should use this book as a manual for interviewing their next money manager. "How to Smell a Rat", could have been titled "Choosing the Right Investment Manager - Things to Ask and Look For In an Advisor".