Catch Some Falling Stars

I was scanning Yahoo Finance today for some typical fundamental commentary and boom there it is from the Motley Fool:

“Some days, you have to love the market. Like today. Yes, I’m one of those people who, perversely enough, has a big appetite for red. That’s because I love getting shares on sale, and I think there might be a few good bargains appearing today. Despite good-looking sales results, a lot of fine retailers are taking their lumps. Case in point: American Eagle Outfitters. It has dropped like a rock over the past few days, including this morning, apparently owing to Street dissatisfaction with July sales and earnings guidance. What’s bunching the schizoids’ undies today? Horrors! It’s same-store sales growth of 17% and overall sales growth above 25%. Oh, and charge them with the further crime of lifting earnings guidance into the range analysts were expecting. You’ll excuse me if I laugh openly at the people running screaming for the exits, especially given the trajectory of American Eagle’s margins, free cash flow, and dividend. (Hint: The direction is up.)”

This all sounds like great fun. But doesn’t it also sound like the typical banter so common not but a few years ago during the dot com bubble? If the trend of the share price is up, you are long. If the trend of the share price is down, you are short. If you find this kind of fundamental commentary from Motley Fool insightful please be kind enough to tell me how you use it to your advantage.

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