Friday, August 10, 2012

Lesson / Tutorial 14 con't CAST Chinacast hits the dust

A while ago, I wrote an article about CAST Chinacast's fraud.

So recently, I decided to check on Chinacast to see how it was doing. It looks like everything is right in the world. The company is in ruins. The stock somewhere around  90% and it is now sitting on the pink sheets. There are some really silly lawsuits going around, trying to sue for money that investors lost. How can you get any money from a company that has none? Maybe they should save their legal fees.

Anyway, it just goes to show how easily fraud can be seen and avoided. CAST was one of those companies where the fraud was so incredibly obvious that the company actually admits in advance (in so many words) that they are committing fraud. Those lawsuits won't get anywhere because CAST has covered its tracks. By revealing that they are doing something fishy and emphasizing that they did not pass their external audits, it becomes much harder to prosecute them for any wrongdoing. More of the burden gets shifted to the investor for buying unsweetened garbage.

Chinacast crashing just reminds me of how easy it is to invest. Just by avoiding these lamdmines alone, you dramatically improve your chances of beating the average.

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