Ignore the Rumors, Find the Bargains

On the other hand, when the rumor mill goes into overdrive, it usually indicates a market panic. And that has traditionally meant you can find some bargains.

Indeed, the recent stock-market slump has thrown out some unusual values. One of the most conservative investment experts I know, a 30-year market veteran in London, was finding decent value Friday in pharmaceuticals giant Glaxo SmithKline (GSK Quote - Cramer on GSK - Stock Picks), book maker William Hill and cellular giant Vodafone (VOD Quote - Cramer on VOD - Stock Picks). All three have defensive businesses and their shares are cheap, he says.

"Glaxo is a gimme," he told me, citing its huge cash flow and 4 % dividend yield. Vodafone yields 4.4%, William Hill 3.8%. But of course these aren't heart-racing rumors. They're just stodgy old dividend checks. So why would investors show interest?

Sometimes rumors get started by speculators trying to make a buck on the market swings. More often, though, they're just a game of "telephone" as gossipers morph the message each time it gets passed on. No one even remembers where they heard it first.

I've been covering the financial markets on both sides of the Atlantic since the mid-'90s, and one thing I have learned is to treat every market rumor I hear with a good, strong dose of skepticism.

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