As in fudging the numbers. I’ve always struggled with balance sheets and income statements from the financial industry. I know that’s a sad commentary from someone in the business but the reality is that if there is one group that can manipulate balance sheets and income statements better than any other, it’s the financial sector. This quarter I am really struggling with this whole thing and yesterday, it became even more frustrating when I heard Dick Bove of Punk Ziegel said this about GS:

“I am incapable of estimating the firm’s short-term earnings results accurately. It is my belief that no analyst has demonstrated this capability.”

Quarter after quarter, Investment Banks like Goldman come out and beat analyst estimates by a wide margin. Just click here and you’ll see evidence of Dick Bove’s comment. At some point, investors are left to wonder whether the analysts are so bad or the company is so good. To me, it doesn’t matter which is true.

So when GS, MER, LEH and BSC come out with their reports next week I won’t be comparing them to analyst estimates: that’s just irrelevant whether these companies meet, cheat beat or somehow miss. Instead, I’ll be focusing on the cash flow statement, footnotes and forward looking commentary.