This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

#DigitalSkeptic: The Year In Information Dumbness

2. The profitless bull
We should only be so lucky that 2013's recovery was merely a jobless one. What made the this year's stock run-up downright lethal was that bottom-line net profits were as tough to find as a good job.

Investors seemed unaware that Amazon not only burnt money at about the same rate as domestic rail carrier Amtrak, but is on track to run in the red for a second full year. And forget the bellwether public offering for microblogging service Twitter (TWTR). Its losses were somehow spun as meaningless in the face of mere optimistic gross and operating margins -- which makes no sense for a company that does all its work on computers. After all, does anybody really know what the "cost of goods sold" is for Twitter? Or Facebook? Or Google?

"Why is it such an issue for company managers to step forward and admit they overreached and that what the upside investors are betting on maybe happens a little later," is how Andrew Left, executive editor of Citron Research, explained it to me. "But nope, quarter in and quarter out, it's always better and better, more and more, even though that can't possibly make any sense."

3. Stocks go up ... because they go up
But what really made 2013 a dangerous trip into the Twilight Zone is that whatever comparable valuation logic existed in this sector is now merely science fiction. On one hand, stars such as Google saw a 52-week low of $625, but now somehow trades at $1,000-plus even though net margins declined for that period. Huh? Then there's eBay (EBAY), one of the Web's real profit-making engines, which saw a 52-week low of $48 but only posted a high of $58 on what was basically a story of improving net margins for the year.

Must Read: Cost Has 43% of Us Wanting to Skip the Holidays

What's happening? Simple: More investors are piling onto some stocks, so more investors pile onto those stocks. The fundamentals of a company no longer matter.

"All I do is look for buyers to be in control on a share and then I buy it," said Rick Tonge, owner of Tonge Investments, the Oakland, Maine, investment adviser who says he's on track to post one phat year for his clients. And then when sellers take over, I step out of the way and sell."

"I don't bother with any other reality but that," he said. "I haven't looked at an income statement for years."

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.01 0.00%
FB $99.75 0.00%
GOOG $682.74 0.00%
TSLA $147.99 0.00%
YHOO $27.05 0.00%


Chart of I:DJI
DOW 16,027.05 -177.92 -1.10%
S&P 500 1,853.44 -26.61 -1.42%
NASDAQ 4,283.7530 -79.3910 -1.82%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs