What It Means When Accounting Stories Start Making the Rounds

Hint: This Doesn't Happen at Market Tops

Source: Huggingface.co

When I'm screening for companies to recommend in my QUANT-X System and Empire Real Wealth newsletters, I always start the process the same way...

I type the symbol into a screen created for me by my friends at Kailash Concepts and scroll to the bottom.

Up pops a score there that shows the likelihood that the company is manipulating its earnings... But if things are really bad, the screen flashes the dreaded "manipulator flag."

If there's a flag – and there usually isn't – I move on. If the score is high, I tread carefully. The screen also helps me quickly identify high and low earnings and balance sheet quality, and even potentially good and bad capital allocators.

This is a jumping-off point for further research, and the obvious goal is to first weed out those stocks I wouldn't touch. The manipulator score is part of that process.

The reason I bring this up...

Last week, the Wall Street Journal wrote about that score – appropriately called the "probability of manipula…