HOW WONDERFULLY MEDIOCRE EARNINGS CAN MAKE YOUR KIDS HAPPYS, YOUR MIND HEALTHY AND YOUR PORTFOLIO FAT
PSTR is one of the larger holdings on the portfolios I manage. They released earnings yesterday after the close. Without getting into abundant detail about earnings (not my style anyways) they were wonderfully mediocre. To be wonderfully mediocre is a celebration of mediocrity. PSTR management I'm sure pulled out the streamers, party hats and red velvet cake in order to celebrate their mediocre quarter.
How did the stock celebrate mediocrity? Not with a high volume, high velocity sell-off. It gapped down in the morning and sustained its losses throughout the day on what turned out to be average volume.
Earnings don't matter to PSTR here. Earnings don't matter to any company that is in its bottoming process. The crowd that would sell into a negative earnings report left a long time ago. That doesn't mean that a company can completely miss whatever estimates are out there for top line, bottom line and future projections. The numbers have to be reasonable. But a mediocre report like what PSTR came out with yesterday is irrelevant.
Put PSTR smack in the middle of a sustained uptrend that has seen the company appreciate over a 1-2 year time frame. Then you will see investors enter the stock who have expectations. You have nervous money who will sell mediocrity. Earnings matter when you are in the meat and potatoes portion of the uptrend. They don't matter when you are still having appetizers.
With that said, you can put away the magnifying glass. Take the 10-Q you just printed out. Let your kids use it to draw pictures of airplanes. You're better of spending your time reading A Confession by Leo Tolstoy...one of my favorites. The Power of Now by Eckhart Toole is fantastic. If you must read a market related book, I like The Education of a Speculator by Victor Niederhoffer. It's a book that teaches you to look at the market and see a sky that's green when everybody else only sees blue. Never mind that some of the top-ranking fund managers over the past 10, 15 or 20 years have grown up under Niederhoffer's tutelage.
PSTR has a long ways to go in terms of realizing its value. I've got a tiger by the tail and I ain't lettin' go.
