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Shadow a Liar: Strategy for Newbies, Fools or Anybody that Needs a Way to Outperform:



November 25, 2008 – Comments (6) | RELATED TICKERS: AMSC

Fools come to CAPS to learn. Many Fools will "dogpile" aka follow a Top Fools and shadow his or her picks. That is  a decent strategy, I still watch other Allstars to steal ideas.

CAUTION: I think it is very important to know your Allstar if you are Dogpiling his picks will real money.

Example: I "dogpiled" Floridabuilder, on housing stocks, but I did not follow him outside of housing. Housing was his expertise and I did not want to "dogpile" outside of his expertise. If I do not understand a Top Fool / Allstars picks I would NOT blindly follow them will real money.


Another strategy is to Outperform the market is to find an inept or corrupt Wall Street Analyst, or as I call them Paid Liars and shadow his picks by doing the opposite of his recommendations.

Fool does a great job by having a list of Worst Wall Street Trackers.

Take gander at the list and see if you can find a pattern from when the paid liar aka Stock Analyst makes a recommendation to buy and when the hyped up garbage he is recommending tanks.  

Citron Research had a good write up on Toby Smith one of Wall Streets worst. T.S. might be a guy worth playing opposite with.

From  Citron Research: 

The Blind Cheerleaders

Tobin Smith of Changewave investing recently published a glowing piece on Emcore.

In his recommendations he seems to break the law countless times with a multitude of Reg FD violations.

For those of you who do not know Tobin, he is a newsletter writer with a sizeable following of the lowest common denominator of investors.  This is not the first time Citron has encountered Tobin.  He has been equally as bullish on three other stocks we profiled.

The first was Interpharma, (AMEX:IPA) which Citron wrote about when it was $7.  Tobin called it a “legacy buy”.
The “ legacy” of IPA is 5c per share.   

Marketwatch wrote the story of Tobin vs. Citron.

Then there was Zeros and Ones  (OTCBB:ZROS).   In 2007, Tobin recommended this company that he claimed was going to revolutionize file transport speeds on the internet.  His subscribers bought the stock up.  Citron reported on ZROS :   

ZROS is now VOYT and the stock now trades at .16 cents.

American Superconductor (NASDAQ:AMSC) In June and July this year, Citron warned about this company, which Tobin went on to recommended just a few weeks ago at $38, with advice to “get more aggressive” at $35.  Just three months later, today you can buy all you want around $21, and you don’t have to get aggressive about it, either.

So now we have our fourth stock to add to the list.  Citron is so convinced of the terminal nature of Emcore’s problems that it makes this prediction:  Not even Tobin Smith’s ego can save this company from its fate of ending up in penny stock land.   Citron Research vs. Tobin Smith is like the Harlem Globetrotters vs The Washington Generals.

FYI - Watch Peter Schiff take out some Liar/Cheerleaders here:

Peter Schiff Was Right 2006 - 2007 (2nd Edition)




6 Comments – Post Your Own

#1) On November 26, 2008 at 10:28 AM, kdakota630 (29.21) wrote:

I like Tobin Smith as I find him an interesting character, but I don't follow his stock picks.

I distinctly remember him picking Thornburg Mortgage once, somewhere around 6-8 months ago, roughly.  On here, it was a 1-star pick and people were thinking it was going bankrupt, including myself.  I started thinking, "what does this guy know that the rest of us don't?"

Turns out the answer to that question was "nothing."  At least a few weeks later he apologized for the call and said he was wrong and it was likely bankrupt.

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#2) On November 26, 2008 at 11:43 AM, kdakota630 (29.21) wrote:

I think I commented on one of your other blogs regarding Ben Stein being a horrible financial commentator, particularly after a clip of watching him and Schiff go back and worth when Stein made his Merrill Lynch call.  I found a nearly year-old article from the NYT where he apologized to Schiff:

"Next, here’s a lesson I learned in a 12-step program and should have learned better: avoid contempt prior to investigation. When the financial stock meltdown started, I was on a television show with Peter Schiff of Euro Pacific Capital, who warned that Merrill Lynch could be in very bad shape. I glibly said that I thought that its problems were limited and that the stock was a buy. Mr. Schiff was completely right and I was wrong. I had no idea that Mother Merrill, where I have been a happy stockholder for years, had been turned into a such a wild house of high-stakes gambling. I apologize to Mr. Schiff for my dismissal of his views, which turned out to be far superior to mine in this area. (I could do without his acolytes sending me endless hate mail, though.)"

Things like that are the reason I'll always like Ben Stein as a person, even if I disagree (often profoundly) with him.  In the same vein, Laffer is a jackass for not admitting to being wrong.

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#3) On November 26, 2008 at 2:11 PM, Tastylunch (28.61) wrote:

I like the inverse chump strategy as well, I've had great success shorting Cramer pumps two-three days after he pumps 'em (I let it percoloate through the sheeple a bit). In this bear market It's a high probability game.


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#4) On November 26, 2008 at 9:15 PM, lquadland10 (< 20) wrote:

Informative as usual. Thanks.

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#5) On November 26, 2008 at 9:16 PM, abitare (30.18) wrote:

FYI - Here is Peter Schiff when the Dow was 12k taking on Tobin Smith at 0430


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#6) On November 28, 2008 at 12:36 PM, lquadland10 (< 20) wrote:

I wish Texas could op out and become its own country.

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