Robots are the New Dot Coms – Before Destroying Humanity
By Richard Birecki - April 30, 2012 | Tickers: AMZN, MSFT | 0 Comments
Richard is a member of The Motley Fool Blog Network -- entries represent the personal opinions of our bloggers and are not formally edited.
Analysts sit like civilian generals in their ivory towers waiting for reports from the battlefields to pour in. When all data is received, they come to a collective consensus, the distribution of which, taken as gospel by most investors, often causing seismic activity in stock charts. However, most of these Wall Street number crunchers don't see the permutations of the game as it is being played. It is the soldiers in the trenches that see the fight as it evolves.
While Enron was robbing citizens of California, and falsifying their figures to meet Wall Street expectations, "experts" on the street screamed "Buy! Buy! Buy!" based on their so called "exhaustive research," publishing glowing reports filled with spreadsheets and projections, sending many lemmings over the cliff and to their doom.
The company was a house of cards. When you ignored the hype, and took an objective look at what they actually produced (nothing), and why anyone wouldwish to invest in them (hopefully you didn't) it became a very simple equation. Yes, there were reporters that actually did serious investigation and unearthed the fraud, but where were the analysts during all this? Drinking the Kool-Aid and passing on cups to their clients, who trustingly drank down the poisoned spreadsheets.
Watch the video: Robots- the next .com of investing
Look, don't get me wrong, I'm not saying that number crunching, and analytics aren't necessary. I'm not advocating purchasing a stock just because you and your friends use the product; more investigation is needed. You can have a great company, with wonderful offerings, and be paying way too much for your shares without analyzing what's a fair price. Case in point, Microsoft (NASDAQ: MSFT) in 2000 was a great company, with bright prospects, but overpriced. Steve Ballmer, while certainly no Steve jobs, has increased revenues, profits, and created value, but investors have been clamoring for his head because the stock still is nowhere near its all time high, but whose fault is it that investors had bid the price up to the moon? (not his) Today, Microsoft is at a turning point, if Windows 8 is a hit, on computers and in mobiles, Softy might even get back to levels seen way back, well ... in 2000.
My point, most huge trends and huge price movementsare so obvious in retrospect, but few people take advantage because they can't see them, their heads are buried in the numbers, collective consciousness, and the premise that the analysts know all.
Let's take a look at some examples of some situations that we can see clearlywith 20/20 hindsight
In the mid 1990s, newspapers (do they still exist?) were yelling about the information superhighway that was coming. The term snail mail was invented; a radical, new, disruptive technology was coming into being, creating real value for society, and yet there was a several year delay before Internet stocks shot into the stratosphere.
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Robots are the New Dot Coms - Before Destroying Humanity