Even Reputable Investment News Can Be Misleading

If you’re looking for investment ideas, a great place to start is to read articles and reports from reputable sources. Of course, the keyword in this sentence is “reputable.” Barron’s, one of the more reputable sources for investment news and ideas, is a financial newspaper published weekly. They tend to produce high-quality articles for industry professionals and investors alike. However, as we will find out, nobody is perfect.

 

 

In the January 8^th edition of Barron’s, Scotty George wrote an article titled “Sustainable Gains Matter More Than Home Runs” for the Other Voices column. The title suggests that the article quite likely contains some valuable insights. Who wouldn’t want “sustainable” gains from their investments? However, upon reading the article, it becomes clear that Scotty has gone to great lengths to sound intelligent while offering little useful information. Here are a few of the author’s pontifications:

 

 

“A way to begin the year effectively is to establish a discipline for managing both risk and resources. There is no ‘normal’ to investing, only a stability of methodology that hopefully gets one to the desired objectives.” Scotty continues by stating: “In other words, the cyclical, and secular, bullish bias remains. The view from 30,000 feet is of a planet that needs to get its house in order – from climate, to security, to economics, poverty, hunger, diseases, and hatred. If we are correct, this year should see a sequence of positive processes, both political and economic, designed to eradicate the worst, accelerate the best among us.” Scotty offers no insight as to exactly what processes he thinks are going to change the world, but apparently, they are out there and being deployed as you read this. Scotty concludes by suggesting: “Therefore, our strategic conclusion is to widen the aperture of perception and utilize investment capital to remedy a fragile Earth.” Reading this article might leave you with a warm fuzzy feeling, however, you have no idea of what you should do. Evidently, Scotty has no idea either.

 

 

Scotty George is the chief investment strategist for Alexander Capital. A look at Alexander’s website reveals that one of their services is assisting small companies raise capital and helping them gain access to the public markets. A simple observation reveals some of Alexander’s deals haven’t gone well. On 10/12/23 Alexander Capital offered 1,000,000 shares of La Rosa Holdings Corp for $5 per share. By 1/22/24, La Rosa had declined to $1.85. On 12/19/23 Alexander helped Single Point raise $4 million selling 800,000 shares at $5. One month later, on 1/22/24, Single Point is at $.67 a share. Maybe Scotty should get Alexander Capital’s house in order because this is not what most would call a “discipline to manage both risk and resources.”

 

 

In truth, Alexander Capital may have other parts of its business that are doing extremely well. However, searching for and finding some issues only took a few minutes. Most likely, Barron’s didn’t bother to look. I don’t want to be too critical of Scotty, however, I wonder if Barron’s would have published the article if they had more history regarding the firm. The lesson here is to trust but verify. Even the sources that would seem to be credible and reputable can sometimes be misleading. No matter how intelligent someone may sound, the laws of economics never change. Companies must eventually generate cash flow and it helps if they pay some of it to you. Pontificators either seem to promise a new dawn or dark clouds on the horizon, but some version of normal is usually enough for most people. We begin the year with inflation cooling, interest rates coming off from last year’s highs, and the stock market at all-time highs. The world is apparently not too far out of order but can always be improved.

Observations On The Market No.391