- We think the story has changed ...
- We believe management has made smart decisions here, and is coping valiantly with tough positioning. Also, we realize that holiday is a bad time to judge the efficacy of emerging initiatives, so we model a much better showing in upcoming quarters.
- We think part of the reason why the promotional environment was so tight was that other players like WMT and AMZN saw the progress that BBY was making in categories TVs and tablets and it motivated them to respond in kind over the holidays.
This is the type of trash we get from Wall Street analysts on a regular basis. And it's dangerous, toxic and, ultimately, even after such a huge win for the stock in 2013, a great way to help people lose money or give away gains they have yet to book (and never took because of your original recklessness).
Allow me to explain my rationale with an indirect, but relevant example, followed by more specific dialogue that, to be fair, applies to dozens of other analysts, not just Lasser.
Very few have the guts to say I got the stock right, but the company wrong or vice versa. I know, off of the top of my head only two -- Richard Tullo at Albert Fried and Michael Pachter at Wedbush.
While I got the company right in 2011, I should have had the sense to ride the stock's momentum. Sure it crashed eventually so part of me deserves a pat on the back for staying the course. My coverage of NFLX made people money in 2011. I have the emails with offers of lunch or dinner and drinks to prove it. For the record, I accepted none. That said, I should not have been so stubborn on 2011's run to $300. I could have turned bearish on the stock after it had had its irrational and seemingly endless surge.
But I practiced humility and good sense, learned from my mistakes and, while remaining bearish on Netflix the company, touted NFLX the stock as a momentum buy as early as Summer of 2012. And I made no bones about riding the momo all the way past $300.
We think the story has changed ...
Bull crap, man. The story didn't change. You got it wrong in the first place.
We believe management has made smart decisions here, and is coping valiantly with tough positioning. Also, we realize that holiday is a bad time to judge the efficacy of emerging initiatives, so we model a much better showing in upcoming quarters.
That excerpt came alongside a whole spiel about Best Buy management acting prudently by cutting costs and so on and so forth. These Wall Street guys have a way of being able to tell us what happened after it happened. Generally it tends to be more useful to portend how things will take shape before they do. Case in point.
We think part of the reason why the promotional environment was so tight was that other players like WMT and AMZN saw the progress that BBY was making ...
That comment alone should discredit Lasser from being able to publicly comment on anything -- including sports, music and movies -- ever again. If you really think Amazon.com (AMZN - Get Report) is doing anything other than carrying out the long-term strategy that has put the Best Buys of the world in the position they're in, you're delusional. His observation shows such a wholesale misunderstanding of the dynamics of the retail environment, particularly as it pertains to what Amazon does, that it's stunning.
Get your head out of your "models," step out into the real world and think for just 30 seconds.
Amazon doesn't compete on price as much as guys like Lasser think. It competes -- or, at the moment, it really doesn't have to compete in the traditional sense -- on providing an excellent and addicting (sticky) user experience.
While Best Buy was busy trying to figure out what the hell was happening to it, Amazon was building out the best ecosystem in retail. That's why it wins in a landslide; not because it's cheaper. Because -- newsflash -- it isn't always cheaper. It's just better. As in a way more appealing option for reasons that go way deeper than price.
And it sure as hell wasn't prompted to act strategically on the basis of something Best Buy did. That's pure inanity.
But here's the real problem. And this is where Wall Street analysts do people wrong. This is where the real danger comes in.
Lasser and his other bullish colleagues got BBY right in 2013. But they were riding momentum. I'd like to think they're smart enough to realize this. That they know they weren't touting an investment in a solid company. They were just, partially as a result of their own collective day-after-day pumping, going with what was hot.
Now, I'm not saying they should not have done that. The name of the game, of course, is too make money, however ...
Be responsible about it!
When the stock crashes because the company's true colors bled, don't play CYA on CNBC and in your "research" notes. Admit it. Say, listen, we had a great run on this thing in 2013, but, clearly we got the company wrong. Because that's what happened.
The backtracking we see in Lasser's note sends out false hope to long-term investors. It sends the message, even if implicitly, that 2013's run was real and these holiday numbers were, regurgitating what the company said (Wall Street is so good at this), a mere "speed bump."
Downtown Josh Brown said it best Friday morning on Twitter (TWTR):
I appreciate the nod, but I like the "bricks & mortuary" line better. That's a spot on play on words.
On its current course, there's absolutely no way out of the mess Best Buy is in. Until Best Buy becomes the physical retail entity that figures out the obvious -- you can't modify and/or take to the extreme the same retail strategies that have failed for the last decade and expect to win in any meaningful way -- it will spin its wheels.
Lasser and his colleagues on Wall Street should know this. And they should have the guts and the conscience to tell their clients as much.
--Written by Rocco Pendola in Santa Monica, Calif.