In business there is a practice called full disclosure which refers to the disclosure by a public company that all relevant financial and operating information must be made available through equal access. Simply put, Wall Street stock research analysts no longer sleep in parking lots to catch an important board member on his or her way to the gym, in order to solicit an undistributed piece of information. Personally, I’ve not noticed an elevation in the integrity of the promise. I also take issue with the myriad of ways in which companies can report their financial information while being faithful to the idea of full disclosure. That information can be in the form of reported earnings, or operating earnings, with or without a myriad of add-ons (EPS before XO items, w/o interest and taxes) or takeaways (after XO item and w/o interest and taxes), you get the idea. It strikes at the heart of credibility since I see the practice as not different from that of painting by number with a prescribed set of colors. However well intentioned it may be, all it leaves open is room for “street professionals” to convince us we can’t do without them. Even then only the obligations of a company can reflect those elements credibly. Good companies have everything to do with the value of their product, the poise of their management team and the worthiness of their cash flow disbursements.
Any ratty old start-up can raise equity since there’s never a shortage of knucklehead investors willing to throw away money and potential stock riches. Profit what profit? It all is pretty meaningless from my standpoint which is why I love using technical analysis. For the heat it gets there is one undeniable fact, it is disciplined, it is grounded in math and the interpretations its open to are always view separately from it concrete results. This makes for a vibrant community of followers who speak a common language. If your broker, or advisor or very smart next door neighbor is using all the methods of analysis and simply relies on what the media and the street hand out, get out of there quick.