From The Beginning

History lessons are painful. If one doesn't learn them the first time, the saying goes you will get the same lesson again.

My start in investing began with a modest savings account. Back in 1978 I think I put $20 into the account every week as my summer baby sitting job was frequent enough for me to have cash and savings. I loved watching it grow and when I left for college in 1982, I had about $1500 saved. Back then, that was a lot of money.

Between beer drinking, partying with sorority sisters, buying stupid stuff that I did not need, I wasted the money.

That was my lesson. That was the lesson I did not learn. I got it again in 2007.

In 2007, I was hired by a global publicly traded company to be their vice president of internal audit. The company issues prior to my arrival were well known and documented. That is, just short of restating the financial reports to the SEC. The company did not take that action, instead shelving the myriad of issues underneath the umbrella of a "material weakness" and hoping the company would not get caught. The auditors agreed.

In auditing terms, there is a materiality threshold set by the regulators which is 1% for significant deficiency reporting and 5% for material weakness. What that means in layman's terms is this:

So, let's start by talking about auditing of company records. A company puts together its financial reports, records transactions in a general ledger and other subsystems. At the end of every month, the company "closes" the books so no backdating of entries can occur. Say, for instance, Jane wants to get cash put back a month to make that month look better, she is unable to do so.

Now, the auditors come in and find that in fact, the cash was moved back to the prior month. This causes a bit a heartburn on the auditor's part. If the issues is small, say less than 1%, then there is really just a finding and a recommendation for remediation.

However, let's say Jane made an incorrect journal entry and it caused an issue that was found in closing the books of greater than 1%, then the company auditors have greater heartburn and more serious discussions. If the percentage goes above 5%, then the heartburn is relayed to the board of directors of the company.

Now, in the company I was vice president of, the issues were not the size of Enron, WorldCom, Tyco, et al. Percentage wise the issues were above the 5% threshold but not in the tens or hundreds of millions.

But with three quarters before I arrived, and three quarters on my watch, the company did in fact have material weakness issues. That is, the company financial errors were above the 5% mark and gave me great heartburn. On top of that, after filing the 10-k (the annual report with the SEC), I received a phone call from my EMEA internal audit manager asking me how to handle the fraud investigation that was directed by his controller, kept from me by the company CFO, and obviously, from the company auditors.

RED FLAG ALERT!!

Two quarters later, I asked the company to restate the financial reports to the SEC. I was fired.

Sarbanes-Oxley does not cover executives whistleblowing as we are seen as "only doing our jobs" - that according to the appellate court in my state at that time.

Here on the Savvy Investor Blog, I'm going to walk you through what happened to me over the past 4 years, how I'm back on my feet investing again, my plans to reach 100,000 shares of stock that pay dividends, the penny stocks that I invest in (ahem, speculate is the real word), and how I decide on what to invest in.

I am NOT a registered broker, trader, dealer, CFA; have no Series license, or any other type of formal education (other than my MBA classes in finance). THEREFORE, and this will be added to my disclaimer at the bottom of blog:

DO NOT TAKE MY BLOG AS ADVICE FOR BUYING. THIS BLOG IS ONLY TO RELATE HOW ONE PERSON - ME! - WENT FROM FILING CHAPTER 7 BANKRUPTCY TO WEALTH AGAIN. IF YOU CHOOSE TO FOLLOW WHAT I INVEST IN, YOU DO SO AT YOUR OWN RISK.

Welcome! Enjoy the read!