The Daily Dose: Some Uncomfortable Truths Revealed

 | Jun 11, 2014 | 11:00 AM EDT  | Comments
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Stock quotes in this article:

rsh

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wmt

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ups

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fdx

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hsy

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cmg

While I've basically lived in front of a camera for the past four years, speaking live in front of a group of people is an entirely different ballgame. So it wasn't without a bit of nervousness that I recently assumed an elder-statesman position and presented to 40 eager summer interns at TheStreet's headquarters.

The topic was how to invest and make it in financial journalism -- and I certainly wasn't going to discuss price-to-earnings multiples and discounted-cash-flow analyses in front of 19-to-21-year-olds. The next generation of financial-services professionals has grown up watching news via streaming videos and television, and they are attracted by the glitz and glamor. Either they want to learn how to really move a stock, like I do with research notes, or they want to really figure out the secrets of developing and appearing in on-air segments.

I am here to help, because there is no school of financial media, nor is there an incubator that gives people the knowledge on precisely how to push a stock higher or lower. It's an art, I think. That said, I did also learn a great deal from fielding questions. Here are the specific investing takeaways that I've gleaned:

Many people are still trying to attain riches in the shortest amount of time. It's so sad. Folks still have a mindset that says it's OK to scoop up penny stocks in the hopes they'll all appreciate 95% in a single session. Or some will believe it's a can't-miss opportunity of a lifetime to buy a stock after it has plunged 50% for three months -- even though the move likely occurred for good reason. Just look at the horrific story of RadioShack (RSH)!

People are not connecting the dots. I see this sort of thing on a daily basis among new clients: a lack of thinking beyond one company. If I am researching developments at Wal-Mart (WMT), you'd better believe I am also pondering the resultant financial outcomes for UPS (UPS), FedEx (FDX) and Hershey (HSY). Yet, from what I've gathered during my presentation, many people are paying little attention to such important matters.

The pursuit of knowledge is dying. Investing involves way more than scrolling through the daily 52-week highs and lows list, and then reading up on the news for the top 10 names on each of those lists. In this day and age, you need to be searching for obscure information wherever it may exist, be it on social-media platforms or anywhere else. Over the past two months I have actually made huge stock calls after studying Instagram feeds for retailers. A picture speaks 1,000 words, and it can serve as a starting point for deeper financial analyses.

As for the stock I suggested they put in their model portfolio: that name is Chipotle (CMG). This is a company that resonates with many people, and the fundamentals of the business are such that the stock's premium valuation is warranted. Better still, there is room for further multiple expansion, I think, as earnings growth accelerates from menu-price increases and the introduction of new items and catering.

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