A Hedge Fund Employee Walks Into A Bar…

Earlier today a friend hit me up on bbm from the bar at JFK Airport to tell me the bartender was giving him stock tips.  If the guy’s working the bar, at the airport bar, surely he’s an expert stock jockey, no?


So the story, as told to me, is that the bartender was pitching my friend hard on  Caterpillar “because they figured out a way to run their machines using water instead of gasoline…they only need to refuel once a week!”

I won’t say where I was at the time this story was told to me, but I will tell you my reaction was a mixture of laughter and fear; laughter at how ridiculous that sounded and fear that people who so clearly should not be prognosticating (and worse, investing) in stocks, are.

Last I checked none of the major automakers have a commercially-available hydrogen fuel-cell vehicle in the US or anywhere else for that matter; the only one’s I’ve seen/read about are prototypes/engineering studies/etc.  I’ve yet to read anything about fuel cells powering large industrial vehicles (not to say it hasn’t been done).

I did a quick google search and found that Cat’s power distribution business is involved in some hydrogen fuel-cell JV, but after playing around on CAT’s website for a few minutes, the only semi-recent thing I found on fuel cells was a white-paper that included this in the introduction:

Reciprocating generator sets have recently been overshadowed by new alternative fuel sources including wind, solar, and fuel cells.  This overshadowing is unwarranted since reciprocating generator sets have been and will be the mainstay of support in the sustainable energy space.

I didn’t see any fuel cell products listed under the “products” section, either.

The timing of this story coincides with the post I wrote earlier today, wherein I argue that institutional investors shouldn’t buy anything they can’t analyse themselves.  An interesting quasi-corollary from that post for retail investors goes along with what Macrotrdr wrote yesterday: even retail investors shouldn’t even considering buying securities about which they have little/no understanding.

To be sure, 99.999% of retail investors likely can’t figure out a 10-k or dcf model, but as long as they’re not betting the bank, I don’t think there’s anything wrong with retail investors allocating some % of their investable assets to individual securities (depending on age, income, etc).  HOWEVER:

  1. That % should not be anywhere close to the majority of the portfolio
  2. No one should EVER EVER under ANY circumstances buy a stock/bond/whatever because of something a friend told them or a headline they saw on Yahoo Finance or wherever, and lastly:
  3. If/when a retail investor decides to buy an individual stock it should only be AFTER doing cursory research. In this case: a simple google search destroyed the purported investment “thesis” in 5 minutes.

I don’t think what I’m suggesting here is beyond what anyone with a brokerage account can handle.  Anyone that buys some security at the recommendation of a broker, a friend, a pundit without doing even the slightest bit of cursory research and gets burned as a result deserves it.

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