It's Time to Build a List of Trustworthy Stocks

Want to get back into stocks but are afraid we haven't heard the last of cooked books, fraudulent Wall Street research, lackadaisical boards of directors and self-serving CEOs?

Wouldn't it be great to have a list of stocks of companies free of those kinds of problems?

And if these stocks were good investments, too, even the most skittish investor could use the list to find those shares best suited to form the core of a portfolio.

I have no illusions about how difficult putting together such a list would be. Or any egomaniacal belief that I could successfully tackle that job by myself.

Mobilize the Troops

First, it involves the notorious difficulty of proving a negative. It's easy to show that a company is blemished -- just find a bloated CEO option plan in the proxy statement or some off balance sheet expense hidden in the footnotes to the financial statement. But no matter how hard you search, no one can prove that a company is blemish-free -- only that the search has failed to unearth any negatives.

Plus, the data we need for such a list can't be quickly retrieved by any computerized stock screen. To do the job right, we need intimate, long-term knowledge of the internal workings of thousands of companies. No one individual or a reasonably sized team of individuals could hope to handle this task.

Which is why the Internet is the perfect tool for assembling this list. The individuals who make up the network collectively have in-depth knowledge of thousands of companies. Collectively, they have more obscure dirt on individual companies than even the best Wall Street research department. And while individually they may have their own conflicts of interest and personal motives, collectively they're unbiased.