Here's the lying story--to turn into it into an instruction manual, invert and rotate 90° on the Y axis.
From FT Alphaville:
Spotting lies, and the lying liars who layer them
Can you spot a lie? What about a half-truth, a sin of omission or the telling smirk of someone who thinks they got away with it? How about the grand lie, so big it has pillars and caverns of mis-truth, or the subtle wave of misdirection?
Short sellers like to look for lies, in company accounts or in what management say. Find one, stick a red flag in it and go looking for more, on the basis if there’s one there’s several: lies multiply. There is also a small cottage industry in the art of deception, from books of facial expressions to help you play poker all the way to ex-CIA consultants offering interrogation advice.
For instance, the latest report from Muddy Waters on the commodity trading group Noble, which includes some “third party behavioural analysis” of management statements.
Muddy Waters engaged Qverity to analyze management’s statements on the February 26th Q4 2014 results call for deception. (The call is the only time Noble management has spoken extemporaneously in public about the recent criticism.) Qverity provides behavioral analysis, and is founded and staffed by former United States Central Intelligence Agency experts in detecting deception. Its principals authored the books “Spy the Lie” and “Get the Truth”.Noble was addressing claims made by Iceberg Research in a series of reports about the company’s accounting. Noble has denied all the claims by Iceberg, which centre on the alleged use of aggressive accounting techniques, and claims the reports are the work of a disgruntled former employee. Noble’s position is its own accounts and statements represent the truth, and Iceberg’s work is the flawed representation. In a statement the company said it “completely rejects the allegations” made by Muddy Waters and is “studying the report in detail”.
Feel free to read the report and draw conclusions. Our interest is in techniques to assess the truthiness of a speaker. Talks from such experts make for an entertaining half hour at the sort of conferences due diligence professionals attend, and there are some useful tips to keep in mind.
Some are reasonably well known to anyone who has watched a politician be interviewed. Look out for answers to a question which wasn’t asked, or a very specific denial: “I did not have sexual relations with that woman”....MOREPreviously on the mendacity channel:
Climateer Line of the Day: Lying Bond Salesman Edition (TLT; HYG)
Game Theory: "How to Trick the Guilty and Gullible into Revealing Themselves"
It"s All been a Bright and Shiny Lie: Amazon to Open Physical Store In New York (AMZN)
On Lying Bank Presidents c. 1909
"I like… fat… tails and I cannot lie, You vol sellers can’t deny..."
Jim Chanos on Banking, Wall Street, Incentives and Fraud
Research Says Learning Economics Turns You Into A Liar
Earnings Conference Calls: "How Can You Tell If A CEO Is Lying?"
Zeitgeist: "Researcher Accused of Fraud Found Dead"
The fine art of negotiating (with liars)
*Serendipity, Buffett style:
...To earn even 15% annually over the next decade (assuming we continue to follow our present dividend policy, about which more will be said later in this letter) we would need profits aggregating about $3.9 billion.
Accomplishing this will require a few big ideas - small ones just won’t do. Charlie Munger, my partner in general management, and I do not have any such ideas at present, but our experience has been that they pop up occasionally. (How’s that for a strategic plan?)...
-Warren Buffett, Letter to Shareholders, 1984
...You may remember the wildly upbeat message of last year’s report: nothing much was in the works but our experience had been that something big popped up occasionally. This carefully-crafted corporate strategy paid off in 1985. Later sections of this report discuss (a) our purchase of a major position in Capital Cities/ABC, (b) our acquisition of Scott & Fetzer, (c) our entry into a large, extended term participation in the insurance business of Fireman’s Fund, and (d) our sale of our stock in General Foods.
Our gain in net worth during the year was $613.6 million, or 48.2%. It is fitting that the visit of Halley’s Comet coincided with this percentage gain: neither will be seen again in my lifetime.....
