We have all become news junkies; myself included. We read newspapers, magazines (those of us over the age of 40) and tune into CNBC, our phones now carry more information than our brains can process. If you look at the screen on CNBC, you see not only the talking heads (some worth listening too, others not so), but the ticker tape, a review of the major indexes, countdowns to fed time, countdowns to so called important earnings announcements etc. We have guidance of revenues, guidance on earnings, missed earnings, beat earnings. And the one thing I have come to conclude after decades in this business….most of it can be ignored. Seriously. If I sold JNJ every time I heard negative guidance I would have missed out on an 11 bagger. If I dumped Service Corp International on an earnings miss, I would have missed out on a 4 bagger. Stryker has been sued numerous times for implants that have caused harmful side effects in patients, yet, the stock has more than doubled in the last few years. Our advice to readers. Either learn to filter or ignore most of what you read or hear. For informational purposes, those are decent sources of information. But to base an entire investment thesis on something you hear on CNBC or a pundits ramblings on a news show, should usually be avoided.
On the other side of the coin, companies like Intellia and Editas Medicine have nearly unlimited potential in the genomic editing field yet have been cut in half over the past year and are down substantially from their all-time highs and barely holding their IPO prices. Many of the big pharma companies have stock prices that have flat lined for years, their blockbuster drugs going off patent constantly have to be replaced with new hit drugs making it difficult to break out on the upside.
I like some of the pundits I see on the tube, but they should have their track records aired in public. I have to ask myself each and every time I hear someone make a recommendation—what was their investment stance in August 2007—before the market’s plunge into the abyss as the pending financial crisis was about to level the Global economy. Were they bullish at the top? Did they get back in around March of 2009? How have their recommendations done?
Barron’s financial magazine has done something unique; any stock they mention gets reviewed twice a year as sort of a report card. This holds the authors accountable and likely acts as a screen as well. They offer up picks on stocks they truly believe have a chance at appreciation. I wish the “experts” all had a little bubble on the TV that showed their recent pick’s performance as they were talking. Then we could separate the real experts from the wannabees in quick order.
At any rate, as one gains experience, you learn to filter much of this information. After a few years you will learn which sources are trustworthy and have information worthy of spending your time on. We will try and point you in the right direction. And as always, win or lose, we will eat our own cooking and put our track record out there for all to see.
Be careful out there.
David Lerman/Jodie Warner