Shane, this just goes to show that when it comes to predicting the future business prospect of a company, mgmt may not have any more advantage than the analysts and the public. The business is just too volatile.
Sometimes we demand a firm answer from mgmt/investment relations personnel when in fact anything they do get badgtered into saying is very likely just plain guessing. It is no wonder sometimes it is just best to remain silent.
And yet we see people on this board that just trash the mgmt to pieces when things don't pan out in the short term.
Acorn fund manager Ralph Wanger had some interestng thing to say about long-term investing in his latest venerable quarterly report:
"Last week I watched a lady walking her golden retriever in the park. The dog romped all over the park. The dog chased a squirrel 50 yards to the north (the squirrel was too smart for him and got away). The the dog ran the opposite direction to intereview a little boy with an ice-cream cone. After that, another dog showed up and they chased each other in circles for awhile. In ten minutes the golden retriever had run a mile in all directions. If you tried to guess where that dog was going to run next, it would be a very difficult forecasting problem! You would have to know where every squirrel, child and dog was in the whole park and then guess what the retriever's response would be. However, there is a simpler way to solve the problem.
The dog's owner entered the park at the south entrance. She then walked 3 miles an hour down the sidewalk and left the park at the west entrance after 30 minutes. The dog came in with its owner and left with its owner. You know where the dog started and where the dog ended up, even though for the half-hour in the park the dog's motion was unpredictable. You can think about the stock mkt the same way. If you read the morning newspaper or watch the stock mkt on TV, the journalists will stress the short-term movements of the mkt in order to deliver an exciting story (and it has been exciting recently), but all they are doing is recording the random romping of the retriever. However, if you concentrate on the long-term basic economic trends that move smoothly and steadily over multi-year time spans, you know where the lady is going and therefore where the market dog will end up eventually." |
