Monday, June 30, 2008

Actually, Motley Fool, any fool who listens to your investment advice might get his own wallet handed to him – empty

See that bar chart over on the right? It shows approximately where GE stock was on June 30, 2007 (left bar), and where it was a year later (right bar). It’s based on a copyrighted line graph that I can’t show you, but that you may still be able to find over at Yahoo’s finance pages.

Both my cranky bar chart and the June 30th line graph at Yahoo indicate that had you invested approximately $3,800 in GE on June 30, 2007, your investment would be worth $2,649 a year later.

So what – the stock market is down. Correct. Except for this gushing-with-praise quote from The Motley Fool, a stock advisory service, that I also found posted the same morning of June 30th 2008.

Instead of being content as a lighting company, the people at GE decided to be an idea company. That's why GE became such an incredible success, and why it continues to churn out market-beating returns a century after its founding. Indeed, over the past 20 years, GE has returned more than 1,170% -- turning a $1,000 investment into nearly $13,000 today. What gave GE the flexibility to move up the value chain? Besides hard work and know-how, it was the company's bulletproof reputation for high quality. In other words, it was the company's brand.
Bulletproof? Moving up the value chain? No no no, guys. As you can see from the charts, the price for "bulletproof" GE is getting shot to pieces at the moment.

The thing about brands is, when you sell off your appliance business, your lighting business and a bunch of other businesses that make things people want, and instead go into the "idea business," your ideas are nothing but a pile of high quality bushwah to the stock market, and so's your brand. Especially when you’re still in the credit business, and the credit business is in the toilet, along with most of the rest of the market.

Sure, once the market goes back up, GE stock may go back up too, and then The Motley Fool will prove to be correct. But if you want to make 13 times your investment, you may have to wait yet another 20 years to see the money.

And to think – people actually pay The Motley Fool for advice like this.

1 comment:

old cranky. said...

Was told it shouldn't be that long!!! Wow what mostakes you made. and i got it. Let someone smarted than me deside. fiund out who been hacking account trying to get my attention. Ty God. Never relized id get so many letters that i won the lotto! Ty man.