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Leak detection is a critical process in the stock market, particularly for value investing. It involves analyzing financial statements to identify potential red flags that may indicate a company's true financial health and performance.

One common method of leak detection is using the "3-60" rule, which suggests that a company's financials should be at least three times its industry average or 60% above the market cap. This rule helps investors evaluate whether a company's growth prospects are justified by its stock price.

Another technique used in leak detection is to examine a company's cash flow statements. A lack of strong cash flows can indicate that a company is not generating enough revenue to support its operations and may be at risk of bankruptcy.

Investors should also carefully review a company's debt-to-equity ratio, which measures how much a company owes compared to the amount of money it has invested in its business. A high debt-to-equity ratio can indicate that a company is taking on too much debt and may be at risk of default.

By using these techniques and staying informed about market trends and company performance, investors can make more informed decisions when it comes to their investments.