Chapter Two - Wiley

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52 CHAPTER 2 A Further Look at Financial Statements
concerned that small investors—ironically, the
very people the Gardner brothers are trying to
help—will be hurt the most by misinformation
and intentional scams.
To show how these bulletin boards work,
suppose that in July 1997 you had $10,000 to
invest. You were considering Best Buy Company,
the largest seller of electronics equipment in the
United States. You scanned the Internet
investment bulletin boards and found messages
posted by two different investors. Here are
excerpts from actual postings during the same
week in 1997:
From: “TMPVenus,” June 14, 1997: “Where
are the prospects for positive movement
for this company? Poor margins, poor
management, astronomical P/E!”
From “broachman,” June 18, 1997: “I
believe that this is a LONG TERM winner,
and presently at a good price.”
One says sell, and one says buy. Whom should
you believe? If you had taken “broachman’s”
advice and purchased the stock in July 1997, by
the spring of 2002 the $10,000 you invested would
have been worth over $270,000. Best Buy was one
of America’s best-performing stocks during that
period of time.
Deciding what information to rely on is
becoming increasingly complex. For example,
shortly before its share price completely collapsed,
nearly every professional analyst who followed
Enron was recommending its stock as a “buy.”
Rather than getting swept away by rumors,
investors must sort out the good information from
the bad. One thing is certain—as information
services such as the Motley Fool increase in
number, gathering information will become even
easier. Evaluating it will be the harder task.
■✓
THE
NAVIGATOR
On the World Wide Web
Motley Fool: www.fool.com.
Best Buy Company: www.bestbuy.com