Topic: How To Invest

What is Pat's commentary for the week of January 4, 2012?

Article Excerpt

As you know, I take investor expectations into account when making investment decisions. When investor expectations are high, it pays to be skeptical and wary. That’s why we advise downplaying stocks that are in the broker/media limelight. When that limelight focuses on a stock, it tends to push up investor expectations. When stocks fail to live up to investor expectations, as they inevitably do from time to time, their stock prices can plunge. Sometimes, however, the best stocks you can find are those that are just entering the limelight, and that are likely to spend a long time there due to great performance. So it pays to look on investor expectations as a valuable tool. But they are just one tool of many that you need to consider when you make investment decisions. The same idea works in reverse. Sometimes, low expectations become common when a stock runs into internal or industry turmoil. Great buying opportunities can appear when investor expectations get…