Shenanigans… Accounting Frauds, Grifts, and Tricks

**SPEAKER_1** (0:01)
Welcome to the Money Tree Investing Podcast. Stock market, wealth, personal finance, value stocks. Invest in your life.

**Kirk Chisholm** (0:10)
Hello, Smart Money Tree Podcast listeners. Welcome to this week's show. My name is Kirk Chisholm. I'll be your host. And today I'm joined with Phil Weiss. Hey, Phil.

**Phil Weiss** (0:16)
Hey, Kirk. Happy to be here on this Friday.

**Kirk Chisholm** (0:18)
Happy Friday. Just getting ready to go on vacation, enjoy myself. I feel like I've been on vacation all summer. It's been very light in the markets and the news, and well, not the news. If you fall in the war, every day is an adventure.
But besides that, things have kind of slowed down quite a bit. Even on social media, I've seen a lot fewer interesting stuff and interested people. All the people that are always posting in the last few months just seem like very, very few.
So I think everybody's just taken it easy, which frankly, I think is probably a good idea.
Got to rest up for the upcoming storm.

**Phil Weiss** (0:53)
Yes. Besides, you can go crazy trying to follow all this stuff. It's good to take a break.

**Kirk Chisholm** (0:58)
It's healthy to take a break once in a while. If nothing else, to reflect, and I tend to do this in December. I do this with a lot of advisors and some CPAs. We do this year-end process called Best Year Ever, where we just walk through a framework I've developed over the years to be really productive over the next 12 months. If nothing else, it's really good for just taking stock and where you are, and what's important to you, what's not. I find to be really helpful. It's one of the best things that are done. Now, I do it every year because it's so powerful, but summer is similar.
Six years ago, I think it was, it was the first time I noticed this is like 4th of July. When it happens on a Wednesday, half the population doesn't go to work in the few days before the 4th and the other half doesn't go after the 4th. So I was like, why don't you take the whole week off? What's the point? Same thing around December. You got Christmas, New Year's, they're a week apart. If they're in the middle of the week, it's great. I think this year was on like, sorry, it's on Friday, so that kind of sucked. But middle of the week is great because people aren't around and everyone takes it off. But generally speaking, in the summer, it's a good time to do things like catch up on reading and projects and just focus down on getting caught up in less stress. So that's what I'm doing. I'll take the next week off and trying not to do any work, but I don't think anything's going on in the market that's warranting enough to pay close attention. But either way, we're diving right in this week.
Not a whole lot to talk about, but I definitely want to go over a bunch of stuff. There's some interesting stuff here. Before I dive in, Phil, what are you seeing out there? You had an interesting note before we were starting taping today.

**Phil Weiss** (2:29)
In general, it's pretty quiet, but actually news came out this week that I thought was interesting because it was something I hadn't seen before, and there was an article in the journal about this. It was on, I guess it was written Wednesday night, so it was the 11th, and so today is the 14th. It was written Tuesday night, and it must have been Wednesday's Wall Street Journal, but it was talking about a different financing vehicle that they're using to fund a lot of what's going on in AI.
So the AI boom in general is requiring a lot of capital, and you have companies like Google sent some things different. Google issued stock. There's debt being issued. Companies that were free cash flow positive, and for those who aren't familiar with that term, free cash flow refers to, you go to the cash flow statement, you take cash flow from operations, which is essentially earnings adjusted for non-cash items, and then you subtract out capital expenditures. That gives you free cash flow. Google has historically been free cash flow positive, and I think they just for the first time ever were not. So they have to fund this, and one of the things that companies were doing was something that we saw back in the dotcom bubble, where the companies were doing the equivalent of vendor financing. They were basically financing the purchases of their product by their customers. That works as long as the business is going and growing, and things are going well. But as we saw in the dotcom bubble, that doesn't always work like Cisco and Lucent, which is no longer in existence because they went bankrupt. Some of these companies, Nortel was another company that had problems with that. But these companies were financing the purchase of their product, and then when their customer couldn't pay, basically the items got returned to them. So instead of doing that, they put together this structure to finance AI deals.