'Due Diligence is for Underperformers'

  • Posted by
  • on October 1st, 2008

One of the main reasons for my sarcastic RULE, one that I have chosen to LIVE BY is that price will keep you out of shitty markets and lot’s of hard work.

We all want ’5 minute abs’, but you ain’t getting them.

If you are going to fish, you can stop anywhere in a lake and drop your line in the water, but if it’s acid dead, you are shit out of luck. There are a few questions you should ask before you go fishing:

1. Does this lake HAVE Fish?

2. What are the hot spots and what bait do I use?

With the stock market it is the same thing, a few questions goes a long way to the best results:

1. Is the market(s) trending up?

2. Are there hundreds of stocks hitting all-time highs, and what are they?

If the answer to both those market questions is no, why even bother. Focus on your job/career and improve. Help Jason Calacanis link bait for a little extra pay from Mahalo. He has 41,000 friends so it may take a little work to get through to him, but still a better shot than the stock market.

If you have been following financials the last year and buying them, all the reading and due diligence in the world would not have saved you from cataclysmic results. You have been fishing in the wrong lake and the whole ecosystem is polluted. Dudes that write a beer blog have done better and had more fun :

If you had purchased $1,000.00 of AIG stock one year ago you would have $44.34 left.

With Wachovia, you would have had $54.74 left of the original $1,000.00.

With Lehman, you would have had $0.00 left.

But, if you had purchased $1,000.00 worth of beer one year ago…drank all of the beer, then turned in the cans for the aluminum recycling REFUND, you would have $214.00 cash.

Two weeks ago, Wachovia was rumored to be buying out Morgan Stanley. This week, Citibank is rumored to be buying Wavhovia to stave off a bankruptcy. Don’t even get me started on the useless due diligence being performed.

One minute of Lindzon due diligence in the last year could have saved you a heap of time, money and aggravation since January.

As of today, the sector to be watching the most, is the financial sector, but not Fannie Mae, Freddie Mac, Citigroup, Wachovia, Merrill Lynch or even Goldman Sachs. It’s the group of banks and financial stocks at or near all-time highs. It is likely still early, but when the drama in Washington slowly plays itself out, some new financial superstars will be born and price will be your best indicator of new leadership .

In the meantime, kiss your kids and whack a nerd.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus