Don't Get Too Excited About Best Buy
And I mean a time horizon on anything -- investing, attention span, life.
If you "trade" -- and you probably shouldn't be doing that unless you have a true statistical edge -- I guess what happens in Washington or in a quarter or two matters. (Then again, if you have an "edge" it has nothing to do with real-life events. It's all about the chart.)
A view beyond the previous and next three months -- one that takes the long-term prospects, strategic-competitive position and vision of a company into account -- renders some stocks virtually untouchable until the dust settles.
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You can certainly make money trading pops in names such as BBY, Research in Motion (BBRY) and RadioShack (RSH) , but, if you get tempted by high risk/big reward too often, there's a good chance you'll blow up your account.
Of course, most people do, and probably should, reserve a portion of their portfolio to speculate on turnarounds and perceived value plays. Just not a good core strategy for most investors.
That's why I chide Wall Street analysts who beat the drum for broken companies on a good quarter or two. That's what we saw last week with Best Buy.
As I articulated ahead of earnings, even if they fail on different timelines, the culture of obviousness will lead Best Buy and JCPenney (JCP) to horrible deaths.
If you want to play temporary pops, false optimism and dead cat bounces on a BBY, more power to you. If you time it right and make money, chest bumps and fist pumps all around. But, if you think these fits and starts mean anything about the long-term prospects of Best Buy (or JCPenney when it pops), you're as delusional as Ron Johnson.
Best Buy has always chased its own tail. Unless there's some dramatic managerial and cultural change at the company, it will always chase its own tail.