RE:Dismissable advice for the weekI agree with this. However, find it difficult to understand the shorts when none of the shorts are willing to share their information.
TickerTwit wrote: I just read a post here where someone appears to have taken RBCCM too seriously. This prompted some thoughts on RBCCM, BNN, longs, shorts, due diligence, and more. None of you want to hear any of this, so in keeping with CXR bullboard tradition I am required to post it anyway.
My dismissable advice for this week (for any week actually, so feel free to read and dismiss as often as you like in weeks to come):
I use RBCCM for news only, never for their analysis. I've caught their 'analysts' (I use that term loosely; I have no proof that they analyze) making large errors in forecasts. For example, the bulk of their forecasts in the materials industries during 2015 were very, very wrong, and anyone who took them seriously likely lost a lot of money. Their analysts for the most part do not seem to have worked much in the field, if at all, and if that willingness to hire hands-rarely-dirtied carries over into their health care 'analysis' I would expect similar problems with reliability.
Do your own diligence on CXR -- put not your trust in long stories, short stories, bankers, financial advisors, or the talking heads on BNN. Be wary of fund managers, because their motivations and methods are NOT THE SAME AS YOURS. They are mandated to treat risk in certain ways, and if you think you can draw meaning from what they do, you are likely wrong.
BNN is not there to help you. Treat anything you hear there with the utmost caution.
Treat short stories as 'possible'. Assess them thoroughly. Even when they turn out to be nonsense (they almost always are, especially here on SH where nonsense routinely takes on biblical proportions), you will learn more about the company in the process of exploring them. And if even one story turns out to be right, it informs you of a risk. What I have generally found is that the risks in these stories are rarely material and have often been magnified either by motive or by confirmation bias. Longs, on the other hand, have a habit of dismissing potential risks without due consideration.
If something looks like a rumour (no named source cited), then that's all it is. CXR has been bought out every Monday since ... BNN heard a rumour. Or made it up themselves.
Do not make decisions based on EBITDA; use cash flow. Analyze the full cash flow (beginning with individual product revenues and cost-of-sales), not merely what the Cash Flow Statement has to offer. Take the Cash Flow Statement and break Cash-From-Operations into smaller and smaller pieces until you can't find any way to go further. Do this for any company, not just CXR. If you don't know how, then learn. Without this as a tool, you're naked and you can't attach dollar meaning to anything you hear or read. [This carries an implication for what you hear and read on TV and in financial journals. It takes a long time to work out a cash flow model. Days. Weeks for more complicated businesses. Ask yourself if the reporters/writers have done this. SeekingAlpha ... well, take a guess. ]
You may commence dismissing me now, if you weren't wise enough to do so immediately.