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Danger Zone 9/16/13: E*Trade Babies

Online trading firms aim to exploit the gullibility of many retail investors by encouraging the myth that they can outperform professional money managers armed with vastly greater resources, experience and expertise. The E*Trade babies are the most glaring symbol of this myth. The symbol also reinforces the notion that investing is an easy task that takes no special effort or aptitude to succeed.
by David Trainer, Founder & CEO
New Constructs
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Danger Zone 8/30/13: LinkedIn (LNKD)

LNKD continues our theme of hot stocks that have overshot their fair valuations. So far this year, LNKD is up 110% while the S&P 500 (SPY) is only up 15%. LNKD is a high-momentum stock in a popular sector, so investors are turning a blind eye to its competitive weaknesses and high valuation. Most people are aware that LNKD is expensive compared to its current earnings, but few people seem to aware of its off-balance sheet liabilities and the alarming level of profit growth implied by its stock price.
by David Trainer, Founder & CEO
New Constructs
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Danger Zone 8/12/13: Tesla Motors (TSLA)

Tesla Motors (TSLA) is in the Danger Zone this week. Up over 350% in 2013, the electric automaker has dominated headlines and made a lot of investors very happy (and a lot of shorts very angry). At ~$150/share, it’s no secret that the stock is expensive. What most investors don’t realize is that there are some significant details buried in the footnotes of TSLA’s SEC filings that materially affect the outlook for shareholders in the company.
by David Trainer, Founder & CEO