Beware of the rogue quote.
A couple of weeks ago, Lew Platt, the
exec who can't seem to keep his foot out of his mouth, was quoted on a wire service as saying that Y2K will cause a slowdown that will hurt his business.
When it came over,
and I pondered it for about 20 seconds and then ran in to buy puts on HWP. Before we knew it, we had made a dollar and skeedaddled. The stock quickly dropped another three points before it was at last corrected by a well-meaning corporate spokesman, no doubt horribly embarrassed that the comment had been made to begin with.
Wednesday night another wire service wrote up a story involving
that gave guidance to growth that was below the traditional guidance from the networker. We quickly sold some Cisco to buy it back when the service was corrected.
Like Hewlett-Packard, Cisco traded down another dollar from our purchase before the denial was fully circulated by the analyst community.
What do these have in common? In a world where guidance is everything, comments that are made off the cuff or are misinterpreted by a reporter take on incredible significance.
These two incidents will look like blips on the chart that will barely be be noticeable several months from now. But for a couple of scary moments, both stocks looked like goners.
My advice is that when you see off-the-cuff remarks by an exec of a firm on the wires that is directly contrary to the party line of the company, you must presume error on the part of the wires. Both of these instances were phenomenal buying opportunities once they were refuted.
Both were refuted almost immediately by sell-side industry analysts working at major Wall Street firms. For these, full-service brokers have the upper hand.
The Cisco situation is incredibly instructive. When this stock was down two bucks, a bunch of firms squawked that the story that precipitated the decline was innaccurate. Those who received timely calls from their brokers were able to make thousands of dollars in a very short time on a household tech name.
How often does this happen? As the financial journalism world becomes more competitive, it has become a several-times-a-week occurrence.
So don't trust every quote you read, particularly when it is diametrically opposed to everything a company has said in the past. And be ready to pounce when these mistakes occur.
A lot of times homework yields something good, but not great, in our business. You hear on an
conference call that the domestic price increase is sticking. So you want to jump on
. But then you see BUD down a couple because of international weakness and you wonder what will be the catalyst for Coors to move if the bellwether is getting knocked. So you sideline the Coors idea and wait for a seller to knock it down, all the while preparing more work on Coors' business ... Fifty-two week highs expanding. I always paid attention to this, but I have become hypersensitive to it since reading
missives (which I love, by the way). She's been right as rain, and if you don't read her, you don't know what you are missing ... Speaking of right as rain, how about
call 25% ago at that roundtable of ours. Or
Gary B. Smith's
30-point catch of
? ... Best and worst earnings conference calls of the quarter? Come on, send them in, to
Dave Kansas. Can't wait to see. Balloting by email myself right now. Confidential of course.
James J. Cramer is manager of a hedge fund and co-chairman of TheStreet.com
. At the time of publication the fund was long Anheuser-Busch, Cisco and America Online, though positions can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column by sending a letter to