Dynamic Marketing Communiqué

Obsession over this “tool” places your investment portfolio in a risky position. Find out why! [Wednesday: The Independent Investor]

October 18, 2023

Miles Everson’s The Business Builder Daily speaks to the heart of what great marketers, business leaders, and other professionals need to succeed in advertising, communications, managing their investments, career strategy, and more.

A Note from Miles Everson:

Do you have a favorite saying that guides your investment strategies, choices, and holdings?

These renowned phrases can serve as a wellspring of motivation, counsel, and emotional reinforcement. Likewise, they can assist you in formulating sound decisions, mitigating risks, and maintaining long-term perspectives.

In today’s issue of “The Independent Investor,” we’ll discuss how the principles of a famous Biblical quotation can safeguard your investment portfolio.

Continue reading to know more!

Miles Everson
CEO, MBO Partners
Chairman of the Advisory Board, The I Institute

The Independent Investor

Cases of corporate fraud have shown how excessive focus on greed and pursuit of money can have devastating consequences for the economy.

Example: The Enron scandal in the late 1990’s.

To put it simply, the controversy revolved around a series of questionable accounting actions that led to the closure of the accounting firm Arthur Andersen in 2002.

The lesson this narrative leaves for investors?

When individuals become excessively fixated on money, it can lead them to commit various unethical, dishonest, and corrupt actions.

Allow us to share with you Professor Joel Litman’s, Chairman and CEO of Valens Research and Chief Investment Strategist of Altimetry Financial Research, explanation on how obsession with money can pose risks to one’s investment portfolio…

Photo from Lyfas Life Care

A Two-Edged “Tool” for Investors

According to Professor Litman, the Biblical quote, “For the love of money is the root of all evil” is often misunderstood.

He believes money is simply a tool that can be used for good, as demonstrated by wealthy Athenians in ancient Greek civilization, or for harm, as seen in the case of the Enron scandal.

Due to this, Professor Litman claims what makes highly successful entrepreneurs is their ability to use their wealth to create opportunities and add value to society. Through this, money becomes a valuable tool rather than just a desire.

Allow us to explain further…

Professor Litman says integrity should be underscored as a key quality for achieving financial success. Unfortunately, this isn’t the reality since greedy management teams exist.

Think about microcap stocks. Companies with market caps under USD 1 billion remain relatively unregulated and receive limited attention from Wall Street analysts and the media. Consequently, these corporations often escape the watchful eyes of larger institutional investors.

Here’s the thing: Regulators like the U.S. Securities and Exchange Commission (SEC) and attorneys general have fewer reasons to monitor small companies like microcaps. Additionally, auditors and government agencies struggle to catch such issues because shareholders of microcap stocks are not typically large institutional investors.

As a result, microcaps become a breeding ground for unethical and questionable practices.

So… what should investors do to avoid investing in greedy companies?

One way is to use a rigorous checklist called “fundamental forensics.”

To illustrate how this checklist can protect you from these stingy schemes, Professor Litman shared an insightful case.

In July 2020, he and his team used fundamental forensics to tag a company named NantKwest, now known as ImmunityBio (IBRX). Through their analysis, they uncovered several warning signs, such as the CEO renting office space at a sky-high cost.

Wait, there’s more!

When Professor Litman and his team gathered all these “red flags,” it seemed that the company’s management team was mainly interested in enriching themselves.

… but despite the indications, ImmunityBio kept attracting investments from unsuspecting investors. This resulted in a massive 78% drop in its stock price since the initial warning.

See? That’s why using fundamental forensics is important. It helps you spot warning signs like weak auditors, management with a history of fraud, questionable headquarters, and any “related-party transactions” where corporate funds benefit management personally.

… and by conducting such analysis, you will be able to make well-informed investment decisions, handle risks, and work towards your long-term financial goals.

Today’s feature encourages you to view money as a versatile tool that, when used wisely and in alignment with your goals, values, and plans, can help you achieve financial success.

Likewise, the Biblical quotation, “For the love of money is the root of all evil” is a cautionary reminder to engage in financial endeavors and ventures with honesty, ethical values, and a well-rounded perspective.

Reminder: Although striving for financial prosperity is a valid goal, it should not come at the expense of your or others’ morals, ethics, or well-being.

If you want to protect your portfolio, seek a harmonious balance between your financial ambitions and life values.

(This article is from The Business Builder Daily, a newsletter by The I Institute in collaboration with MBO Partners.)

About The Dynamic Marketing Communiqué’s
“Wednesdays: The Independent Investor”

To best understand a firm, it makes sense to know its underlying earning power.

In two of the greatest books ever written on investing, the “Intelligent Investor” by Benjamin Graham and “Security Analysis” by David Dodd and Benjamin Graham (yes, Graham authored both of these books), the term “earning power” is mentioned hundreds of times.


Despite that, it’s surprising how earning power is mentioned seldomly in literature on business strategy. If the goal of a business is wealth creation, then the performance metrics must include the earning power concept.

Every Wednesday, we’ll publish investing tips and insights in accordance with the practices of some of the world’s greatest investors.

We make certain that these articles help you identify and separate the best companies from the worst, and develop your investing prowess in the long run.

Our goal?

To help you get on that path towards the greatest value creation in investing.

Hope you’ve found this week’s insights interesting and helpful.

Stay tuned for next Wednesday’s “The Independent Investor!”


Kyle Yu
Head of Marketing
Valens Dynamic Marketing Capabilities
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