The Daily Dose: What Are Your Top Priorities?

 | Oct 10, 2013 | 12:30 PM EDT  | Comments
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Stock quotes in this article:

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fast

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In studying human beings carefully through the years, I have realized that there is a general inability to prioritize.  Not on the part of the execs that I talk shop with as they have reached the upper echelons of business through execution on meticulous schedules and work habits.

On the contrary, I am talking about the average individual, who just can't seem to comprehend those 15 tweets inside of two minutes offers less value to a business than taking that time to think strategically on the month ahead. Or, how about the person that spends three hours crafting a wonderful document to be shared in digital wonderland, for free, only to recognize via Google Analytics that no traffic came back to their newly created WordPress blog and they snagged one lame retweet from a Twitter follower with the egg icon as a picture.

Think for a second: that was three hours that could have been allocated to making money, somehow someway, TODAY!

As it pertains to the average investor, prioritizing what matters and what is pure rubbish should be a daily exercise. Unfortunately, it's not being done by the majority, instead headlines are traded and mere surface analysis is conducted on companies being added to a portfolio.

You would be surprised in going for an interview as a trader or an analyst at an investment back or boutique firm the teensy amount of info you are aware on a stock that you "studied up on" pre-interview. The head of research or head trader would penetrate your thesis inside of five seconds, finding that the only reason you own Target (TGT) shares is because the company "sells cheap chic offerings" and had a "great September comp result." 

How very sad indeed; if I was quizzing you in a minimally decorated room at an investment bank I would ask why Target's Canadian operations have incurred $744 million in operating losses in the past six quarters alone. Bet your sweet tushy that an acceptable answer would not be "because there is a small base of revenue that has not yet fully offset a high base of costs and expenses." Oh yeah, costs and expenses are not the same.

Please prioritize each and every day as soon as that trading terminal is flipped on or as you review the day's market events upon arriving home from work. Use me as a benchmark. While I continue to be bearish on stocks as a result of heightened investor complacency into the teeth of firm dates for the unleashing of financial system and Main Street calamity (got bank runs this weekend?), I am actually placing strong priority on decoding the early earnings season.

If the third quarter earnings season starts well, and we move beyond the DC hijinks, it provides a firm foundation for a rally into year end. On the other hand, if we receive finality on the government shutdown and debt ceiling, but earnings season has begun poorly and nobody cared to get positioned for that realty, any relief rally will be just that... a short-lived phenomenon.

Personally, I am ripping through earnings call transcripts and press releases as quickly as the integrity of government data is eroding (which is each second of the day the government is shuttered), and definitely am not digging the messages emanating from real companies operating in real economies, not the made up economies on display in macro data releases.

5 Examples of Ugly

Fastenal (FAST)

  • "Sales growth came in about where we thought."
  • "We were very disappointed with the margin."
  • "Customers are getting more creative in pushing for lower prices."
  • "Comps in October are softer than September."

Wolverine Worldwide (WWW)

  • Consumer is "hunkering down", seeing this in both mall traffic and own retail store traffic in the last "4 to 6 weeks."

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