The Roth Conference in Laguna Niguel kicks off this weekend. I rarely attend conferences. However, this one I am always torn about because it is literally walking distance from my house. To know that there is a large group of individuals talking small-cap stocks within spitting distance makes me feel that I'm missing something.
I'm a bit of stock market hermit, if you will, when it comes to surrounding myself with individuals that want to provide me with information from which I will make an investment decision. I keep that circle of influence extremely tight, rarely allowing for anybody new. In fact, my new ideas are mostly generated from a series of market screens I run on a daily basis. If an idea doesn't come up on my screens, then it simply doesn't exist in my world. The prevalence of opinions and ideas that is the hallmark of conferences such as the Roth Conference is actually frightening to me professionally.
Let's think about what occurs at these conferences logically: Fund managers are there hungry for opportunities to capital gains. Companies are there to promote themselves to these managers being hungry for investment capital and recognition. So you essentially have two eager individuals of equal hunger coming together countless times over a span of several days. The possibility of erroneous decisions being made within such an environment are extremely high due to both the salesmanship that is taking place on a corporate level and the desire to justify reams of information being digested on an investment management level. Emotionally overwhelming circumstances abound, in other words.
If there was a record of the success investors had at these conferences in finding viable candidates it would extremely valuable in proving my point. The point being that these conferences are equity busters. Meaning that on a net-net basis the expected value of decisions made as a result of these conferences are negative.
If anything, there may be a positive curve in favor of the companies presenting because they are able to garner a short-term boost as a result of the attention gained. However, from an investor standpoint, being sold on an investment by management is not the ideal path towards investment discovery.
The path towards discovery of opportunities should be unbiased, unsalesman like and process driven.
I'll just stay home.
