121: Red Lines, Accounting Gimmicks and Management Gloss: Why You Need to Understand Balance Sheets to Avoid Portfolio Disasters (With Steve Clapham, Founder of Behind the Balance Sheet)

For all the narratives around investing and making money, those who have survived the investment cycles for decades and earned above average returns have typically adhered to sound disciplines. This means valuing companies correctly, not taking shortcuts, not being swayed by management ebullience, and digging into the financial statements is key to optimising returns. In this episode, Steve Clapham, veteran analyst, investor and creator of Behind the Balance Sheet explains why effective investment training has diminished, and how reading accounts is more important than ever in an era of waning cheap money. Steve shares his candid thoughts on the CFA and explains why the cash flow statements are so vital. He then explains why opportunities on the buy-side are increasingly plentiful, before covering a few case studies of 'creative accounting' (including two recent high profile fraud scandals: Patisserie Valerie and Wirecard).    ​​The Money Maze Podcast is kindly sponsored by Schroders, Bremont Watches, LiveTrade and IFM Investors. -- FURTHER RESOURCES To help improve your equity analysis and access world-class training videos, consider signing up to Steve’s Analyst Academy Course. As a festive thank you, he’s offering Money Maze Podcast listeners a 10% discount on the acclaimed course. At checkout, add the code ‘MMP10’ to enjoy the Black Friday discount. Learn more and sign up here! (Offer ends on December 15th 2023). Steve also runs the Behind the Balance Sheet Newsletter. It aims to expose as many people as possible to equity investing, sharing analysis to improve your investing skills, backed by his 25+ year institutional career. Steve is kindly also offering listeners a 30% discount on the newsletter via this link!