There is a Garage Sale on Crystal Balls!
Thursday, January 29th, 2009
This is an extremely tough time for investors as they try to make sense of corporate sales and earnings trends moving forward. While the Q4 2008 results were mixed and thus a little better than expected, 2009 is what really matters now! Some companies are providing 2009 guidance in a fairly normal fashion. Others are using the wide angle strategy, opening up the “goal posts” for maximum safety. Finally, many companies refuse to provide any guidance at all. At the most they will provide scenarios for analysts and investors to work into their models to help them project their own sales and earnings. Project sales and earnings? Lets be realistic here. The world is nearly spinning out of control and investors are trying to place bets? Many are angry at companies who cannot provide them with a reasonable forecast range of sales and earnings for 2009. I guess the analysts and investors could do much better in forecasting energy and raw materials costs? What about foreign currency? Can George Soros make money in the FX markets today? How about the consumer, don’t you have a feeling that they are hanging on for dear life? Would anyone want to predict where unit volume and prices will come out? Lets face it, nobody knows and if they say they know well then the Madoff Character really was the genius that people all over the world thought he was. The phrase “There is a Garage Sale on Crystal Balls” is really brilliant and I wish it were mine. However, the credit must go to OI Chairman & CEO Al Stroucken. Al pulled this out of his tool box after OI would not provide guidance given the limited amount of specificity that could be applied to OI’s forecast. A Crystal Ball is an object that some turn to seeking clairvoyance or the ability to derive information that we cannot obtain through our own intelligence or other means. Garage sales are normally held to get rid of items we no longer want or that do not work effectively. The theoretical Garage Sale on Crystal Balls that Stroucken references implies that not even a “clairvoyant tool” can help us clarify the future today. I only wish that Wall Street figured this out long ago.