Just like you never want to hear a doctor say "oops" in the operating room, you never want to see a going-concern statement in a financial report about a company you own. Accountants throw these in when they've been over the books, talked to customers, and checked the horoscopes and have concluded there is "substantial doubt" about a company's ability to remain in business. In short, don't blame the accountants if the company files for bankruptcy protection.

You¿d reckon that a going-concern statement would be enough to send investors running to the exits, but it's not. True, many large institutions automatically bail when an existing company gets slapped with one of these, but many individuals (often wrongly) take a chance they know more than the bean counters.

During the tech boom of the late 1990s, many companies actually went public even though they had been hit with going-concern statements. Many of those companies subsequently disappeared. Enough said.

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Wednesday, August 13, 2008

House in Detroit Sells for $1

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In what might be considered a new low for the housing market, a home in Detroit sold for $1.

The home, located at 8111 Traverse Street, close to the Detroit City Airport, was foreclosed upon last summer, after it was purchased for $65,000 in 2006, according to an article in The Detroit News.

The bank was so eager to sell the foreclosed property, it lowered the price to $1 in a final attempt to find a buyer. According to the newspaper, 14 days after the property was listed for $1, a local woman purchased the house as “an investment property." The property taxes will run the new owner $3,900, in 2009.

At the time of sale, the home had been stripped of its siding, fence, light fixtures, copper plumbing—even the kitchen sink had been taken. Boards that were used to board up the windows were also stolen and used to board up a house down the street, according to The Detroit News.