Consumer stocks crashed. Analysts now recommend buying them. This passes for insight on Wall Street.
The logic works like this: Things were expensive. People bought them anyway. Now they're cheap. So buy them again. You could teach this strategy to a goldfish. The goldfish would charge lower fees.
Brand name companies got hammered because their brands stopped mattering or their prices got too high or consumers went broke or all three at once. Wall Street's response? Call it an opportunity. Slap a bargain sticker on a turd and suddenly it's value investing.
The casualties have names. They have balance sheets. They have earnings reports that explain exactly why they're casualties. None of this matters to the analysts who spent six months saying "hold" while these stocks dropped forty percent. Now they say "buy" because the stocks already fell. Calling the bottom after it happened. Revolutionary.
Retail traders will read this headline and think they're getting secret information. They're not. They're getting permission to catch a falling knife from people who've never held a knife. The analysts work for firms that need trading volume. You are the volume. You are the liquidity. You are the exit strategy for smarter money that bought these stocks before you heard about the fire sale.
Consumer stocks got cheap for a reason. That reason didn't vanish because a headline writer used the word "opportunity." But you'll buy anyway. You'll tell yourself you're contrarian. You're not contrarian. You're late. Again.
The real opportunity here is for Wall Street to unload bags onto people who think reading financial news counts as research.
Photo by Maxim Hopman on Unsplash
Leave a Comment