Easy There, Quick Draw McGraw

 | Nov 08, 2013 | 11:31 AM EST  | Comments
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This business is humbling. Don't be humbled even more than you should be.

That's the takeaway of some horrendous after-hours trading that we just saw last night, a night that should serve as a constant reminder of how you simply must wait and hear the conference calls of every stock before you pull the trigger. Making money isn't about who is the fastest, it's about who is the most thoughtful.

Last night, within just a few minutes of trading, we got reports from Groupon (GRPN) and Priceline.com (PCLN), two red-hot Internet plays that had already been under pressure in the wake of the non-Twitter rout in everything social, mobile and cloud. Priceline fell 50 points even as the company reported a fantastic quarter as the guidance was perceived as being incredibly weak. Groupon dropped a $1 off a $9.90 basis as traders took one look at the quarter and decided that the bloom of the two new CEOs was off the rose and it was time to skedaddle.

At the same time, Disney (DIS) announced a quarter that looked terrific on the surface, but traders dumped the stock down to $64, off a couple of bucks, on what looked to be weaker ESPN numbers. Given that ESPN is one of the best growth engines for the company, that was the kiss of death for the stock, which has been on a tear because of ESPN as well as theme parks and some extremely powerful movie franchises.

If there were NFL coaches in this game, they would have thrown the red flag and the refs would be right in the booth taking a look at the replays of the trading in these fine companies. In our business, that's the equivalent of reading the headlines, studying the release, but the most importantly -- and as I always say -- listening to the conference calls.

And here's what they would have heard: the businesses of Priceline, Groupon and Disney are firing on all cylinders and 2014, what we are investing for, is setting up as a remarkable year for all three.

First, Priceline, which has been chronically underestimated by Wall Street because the snob analysts would never use its service, has been able to instantly leverage what is now looking like a brilliant acquisition of Kayak to expand even faster than it had been. That's why the stock reversed and is now just slightly lower.

Second, you would have heard that Groupon's new management team, Chairman Ted Leonsis and CEO Eric Lefkosky, have cracked the mobile code for Groupon and a mobile coupon and deal company is much more powerful than a static one. The company's a cellphone marketplace. It's going to be a very big stock for 2014 and that's why it reversed and is now up 15% from the bottom of last night's trading.

Disney's probably the silliest of all. The analysts, almost to a person, seemed freaked out by some perceived slowing in ESPN, but the company explained it all away cogently and completely by talking about how some fees had been taken in a previous quarter. So the stock then u-turns and goes up four points.

To me, this is all totally idiotic. It's one thing when you get a stock wrong, as I did, relying on Goldman Sachs research and some previous comments by management, for example, that The Gap (GPS) was doing terribly when it turned out that things were actually fabulous. My bad.

It's another thing to simply not even wait for answers and just go shooting. Remember the tales of Priceline, Groupon and Disney. They are poster boys of why I always warn you not to trade after hours. And if you waited and did the homework, you could have made an overnight fortune.

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