NetNews Usenet Archive 1992 #31/NN_1992_31.iso/spool/misc/invest/15345

Text File | 1992-12-23 | 2.7 KB | 55 lines

Newsgroups: misc.invest
Path: sparky!uunet!spool.mu.edu!sdd.hp.com!usc!venice!gumby.dsd.trw.com!meltami.dsd.trw.com!suhre
From: [e-mail] (Maurice E. Suhre)
Subject: Re: Condemned by Barron's--Is it significant????
Message-ID: <[e-mail]>
Sender: [e-mail]
Organization: TRW, INC.
References: <[e-mail]>
Distribution: usa
Date: Wed, 23 Dec 1992 22:46:30 GMT
Lines: 42

In article <[e-mail]> [e-mail] (Peter Calinski) writes:
>I'm not a regular reader of Barron's but, in the past year, I know of two
>stocks, Marvel and Conseco, that were bashed by Barron's. Of course, in
>both cases, the stock fell a considerable amount.  However, also in both cases,
>within a year, both subsequently hit new highs.

I am a regular reader of Barron's and have been for years.  What I
frequently see is that a stock will be trashed in "Up and Down Wall
Street".  Alan Abelson (or his staff) will simply point out facts
and/or possibilities.  These items suggest that the market is
overvaluing the particular stock under discussion.  They also make for
very entertaining reading (if you don't own the stock :-).

For example, sometimes a stock is selling for "100 times next years
*sales* -- forget about earnings as there aren't any" [This isn't an
exact quote, but the sort of thing you read.]  Or there may be major
competition about to fire up.  Or the earnings would have been flat or
negative if it hadn't been for a reduced tax rate.  Or some expenses
are being amortized over a 10 year period and that leaves 12 million in
liabilities still sitting on the books.  Or ....  You get the idea.
Assuming that the Barron's research is impeccable (and based on the
quickness of the legal profession to jump on the libel bandwagon I would
expect that, lest they get their collective asses sued off :-), it's
bound to influence some people.  Also, as others work out that the stock
drops because of a Barron's hit, they will learn to run for cover too.

Now it may turn out that these really are good companies, that their
profits and sales will continue to increase, the competition won't rear
its ugly head, etc.  On these assumptions, it is easy to see that the
stock drops to a point where its price more nearly reflects the best
estimate of the prospects.  If the company continues to prosper, then
the stock will rise from there.

I don't see how you can be sure that stocks which slide because of
Barron's are going to recover and continue advancing.

I think I'd buy Barron's just for the Abelson column even if I wasn't
interested in investing.  It's sort of like the Louis Ruykeyser
monologue :-)
--
Maurice Suhre
[e-mail]