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Greetings and welcome to Tomments.com! My name is Tom Murcko, and I'm the CEO of InvestorGuide.com, a leading site for online investing. Tomments are my original essays about online investing and business. I plan to continue sharing my ideas and insight about these and related topics whenever I feel something important isn't being said by anyone else. The site is completely free, so have a look around and see what you think. Each essay has a link where you can send me feedback. Also be sure to check out our other sites: InvestorGuide.com (our portal site), InvestorWords.com (a comprehensive financial glossary), and WebFinance Consulting. We also publish free daily and weekly email newsletters (more details are in the column to the left). Thanks for stopping by, and I hope you find Tomments useful.
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The Latest Tomments
Are there bargains to be had in the internet sector? This essay provides a list of internet stocks which are trading for less than the cash they have on hand, making them potentially good value investments. Some of these companies are even expected to be profitable next year. The essay also explores some pros and cons of this type of internet sector bottom-fishing.
Click here to read about a driving-related Observation Selection Effect. Not business-related, but pretty cool nonetheless. |
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The Latest Mini-Tomments
On Friday, Fed Chairman Alan Greenspan said at a financial markets conference that the failure of nearly all companies to treat stock option grants as an expense has resulted in corporate earnings being systematically inflated. This is obviously true, and it hasn't been corrected already only because of significant resistance from business executives, trade groups, and politicians who focus more on the negative short-term consequences of revealing this fact to the investing masses than on the long-term benefits of increased accounting transparency. We at InvestorGuide favor almost anything that empowers individual investors by giving them the information they need. But for most companies the options expense estimate is already available, it's just buried in the footnotes to the financial statements. As with any situation in which information is available but hard to find, you can benefit more if you have the information and others don't, so as long as you're doing your homework you should prefer the current situation. (05/06/02)
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Previous Tomments
Tomments 9
A House subcommittee convened last week to begin investigating whether analysts are giving biased advice to their clients due to conflicts of interest. Separately, Wall Street's largest trade group, the Securities Industry Association, issued a set of "Best Practices for Research", with the ostensible intention of clearing up the same problem. Can you trust these organizations to eradicate the conflicts of interest? And if not, what can you do to protect yourself?
Tomments 8
While the concept of "survival of the fittest" originally applied to biological evolution, these days the term seems to be used at least as often to describe the business world, especially the dog-eat-dog internet sector. The business world may sometimes seem, like nature, red in tooth and claw... but is the analogy instructive? Can we learn anything by applying the idea of evolution via natural selection to internet business?
Tomments 7
In the midst of the tech sell-off, have investors been as indiscriminant in their selling as they were in their buying last spring? Have we lost sight of the big picture? Tom takes a look at the market downturn and tells us why it isn't such a bad situation; in fact, he thinks that, for most investors, it's a good market environment.
Tomments 6
What qualities do you look for in a presidential candidate? A CEO?
Tomments 5
Has investing gotten fundamentally more difficult in the last few years? Tom thinks so. Here's why.
Tomments 4
Is Bill Gates a good investor, and can you profit from his investment strategies?
Tomments 3
What is the difference between gambling and investing? The distinctions might not be as clear as they first appear.
Tomments 2
Analysts, mutual funds, magazines, and the folks in the next table at the coffee shop all claim to know what stocks are poised to jump. But who's worth listening to? The internet will soon make the answer easy, by dramatically increasing accountability for all.
Tomments 1
Internet incubator eCompanies paid more than $7.5 million for the business.com domain name, shattering the old record of $3.3 million. Did they pay too much?
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Previous Mini-Tomments | Archived Mini-Tomments
Some people view investing as determining a company’s actual value, assuming that in the long term, the price will follow. Others view investing as predicting what other investors will be willing to pay for a given stock in the near future. I prefer the former approach because it's safer (you can limit your losses as long as you do your homework) and because I've found that I'm better at comparing value to price than I am at predicting what other investors will soon be thinking. If you are better at the latter, then I certainly wouldn't discourage you from this type of market-timing; the important thing is to understand the difference between the two approaches and to know which one you're doing.
In response to news, the market usually gets the direction of the move right but its magnitude wrong: bad news moves it down and good news moves it up, but not necessarily by the appropriate amount, since short-term moves are often driven more by emotion than logic. This sounds like an opportunity for easy profit, but it isn't quite so simple. Even if you are better able than most investors to quickly evaluate how much a new piece of information should affect the price of a stock, investing based on news is dangerous, because it wrongly assumes that the pre-news price was an accurate reflection of the company's value.
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