Don’t bank on those dividends

The bezzel is the period that any embezzlement remains undisclosed. Galbraith used it to explain how, over this period, there is a positive wealth effect, as both the embezzler and the embezzlee believe they possess the embezzlement.

In an entertaining speech, Charlie Munger considers the functional equivalents to the bezzel which he calls the "febezzel". The febezzel need not be illegal, but it has the same effect of creating the illusion of wealth where there is none. 

Unfortunately, you do not need to look too hard to find potential examples of the febezzel in financial markets. Reported profit, perhaps, is a good start.

An accounting profit is just a best guess of the economic profit of a business in any given period. The economic profit of a business is the residual after all other claims on revenue, including opportunity costs, which can be proxied with the cost of capital. It is, in effect, the change in intrinsic value of a company for a given period. Accounting profit is often a relatively good guess, but it can be a febezzel candidate when calculations become complicated. If accounting profit overstates the economic profit of a company, its share price might also overstate its intrinsic value, creating a short-term illusion of wealth for the holder of the equity in that company.