Online Investing Hacks

Choose Your Favorite Flavor of Data

Mixing financial data from different sources can lead to fiscal indigestion, so you should evaluate data differences and then stick to only one source for all your stock analyses.

Accounting might seem tedious, unambiguous, and best performed by quiet folks wearing thick glasses, but in reality it’s a creative field with plenty of room for interpretation. Generally Accepted Accounting Principles (GAAP) are merely a set of guidelines that have evolved over the years to help accountants present financial information fairly and consistently from company to company. Truth be told, there’s wiggle room in those rules and companies take advantage of that fact. Once in a while, a company goes much too far. The data providers that distribute financial data don’t necessarily fabricate, but they do use the gaps in GAAP to manipulate data to suit their clients’ needs. Sometimes, these data differences can make good companies look so-so and bad companies look better than they are. To get a true picture of a stock’s potential, you must understand the pros and cons of the style of data reporting, and then use the same standard to analyze each company’s performance.

Types of Financial Data

Data can be manipulated more than once, and I’m not talking about cooking books like twice-baked potatoes. Companies can change how they report their own data, whereas data providers often modify the data that companies report to add value for their clients.

When companies report ...