Jumping the Gun

 | Feb 02, 2012 | 10:59 AM EST
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We are seeing too much shooting first and asking questions later. Take last night. We got reports from two companies in two very different industries: Electronic Arts (ERTS) and Core Labs (CLB). Both reported excellent quarters but both guided lighter than expected.

Both immediately traded down, Core Labs to $106 from $107 and Electronic Arts down to $16 from $17.

But, in classic "upon further review," we discovered that both companies are doing so much right and have so much in the pipe that they were huge buys. Core Labs made it clear on my show that it has almost no exposure to natural gas and most of its business is deep-water drill. EA revealed a great pipe of products and has strong momentum from some of its games, including Star Wars.

The headlines just didn't tell the story.

I know that things will never change. As long as there is before- and after-market trading people will continue to try to be first and get the big trades off with the expectation that the headlines are right.

Sometimes they are.

But think of it this way. Core Labs and Electronic Arts are two of the biggest gainers on the S&P today. If you sold, you could not have been more wrong if you tried.

My suggestion is to recall these two next time you decide to bang out bids on a headline. Had you been there on the receiving side you would already be starting out your month with some very healthy gains.


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