Stop me if you've heard this one before. A prostitute, a judge, and Jim Cramer walk into a bar ...*
The prostitute -- actually, "D.C. Madam" Deborah Jeane Palfrey, indicted last month for criminal racketeering and conspiracy, but that kind of breaks up the flow of the joke -- says to the judge: "Your Honor, I bought these 5,000 shares of Dolby Laboratories (NYSE:DLB) a while back. I paid $22 a stub for 'em, and they're selling for $37 now. And I could really use the cash to pay my lawyers, seeing as the feds froze my brokerage accounts."
Jim Cramer: "Are you crazy?! I actually think Dolby will probably have a good quarter. I mean, I know you madams tend to have better information. That you can drill down, so to speak, and see things I can't see. But with an enterprise value-to-free cash flow of 23, analysts projecting 20% growth going forward, and the company having proved the analysts overly conservative in each of the past four quarters, do you really want to cash out of this stock right now?"
Judge: "Yeah, miss. Are you sure about this? I read in Motley Fool Stock Advisor that Tom Gardner really likes this stock. He's recommended it three times already, with average gains of 48% per pick. The company has great relationships with industry leaders like Sony (NYSE:SNE), Motorola (NYSE:MOT), and Microsoft (NASDAQ:MSFT), and it's got four times the revenues of rivals DTS (NASDAQ:DTSI), SRS Labs (NASDAQ:SRSL), and QSound Labs (NASDAQ:QSND) combined!"
Palfrey: "I know, I know. But the thing is, I believe it's reached its peak. I don't want it to waste away."
Punch line, delivered by a voiceover eerily reminiscent of James Earl Jones: "And no sooner had she said this, than the stock plunged more than 10%."
*On the foregoing, I need to make a few confessions. First, although liberal portions of the "Jim Cramer" dialogue are taken directly from his "Stop Trading!" column on TheStreet.com, the balance represents only the spirit of his endorsement of Dolby, and not verbatim quotes.
Second, I have it on good authority that because of conflict-of-interest rules, the judge in the Deborah Jeane Palfrey case does not actually read the stock recommendations in Motley Fool Stock Advisor and says she "just buys it for the pictures of Tom and David Gardner." (OK, I made that up, too. But it's possible.)
Third and finally, Palfrey's "reached its peak" line comes verbatim from news reports on this tragicomedy.
Which prompts the question ...
What's the world coming to, when a one-line stock assessment from an indicted madam can drop a stock more than 10% in fewer than two full trading days? Are investors really that starved for stock advice?
Wall Street-ers, streetwalkers ... tomayto, tomahto
Or is it simply that after nearly a decade of stories about stock-option backdating, mutual fund timing, and stock analysts transforming garbage companies into media darlings, investors just don't see much difference between Wall Street's prostitutes in pinstripes and their more honest, workaday counterparts on Main Street? Perhaps it's a simple case of mistaken identity, the end result of which is: "When the D.C. Madam speaks, people listen!"
If that's the case, then let me dispel the confusion and clarify the differences between Wall Street stockbrokers and Washington, D.C., purveyors of high-quality, er, "adult fantasy" services. The latter professionals will provide you with a "massage" and some pillow talk for $299.99 per hour, plus tax, with a 10% discount for engagements lasting more than one hour. Er, approximately. That is to say, so I've been told.
In contrast, the Wall Street professionals will charge you a 2% management fee on all of your assets, plus front- and in some cases back-loaded fees for the "high-quality" mutual funds their bosses are hawking, in exchange for some canned advice they just finished reciting to the poor schmuck who suffered through their last cold call attempt. Statistically speaking, 80% of these funds will then proceed to underperform the market. Oh, and no massage.
Ready for something better?
For less than the cost of an hour's worth of Palfrey's magic fingers, you can subscribe to Motley Fool Stock Advisor for a full year. For less than the cost of having a broker manage your $50,000 portfolio for one year, you can buy several years of Stock Advisor and join the thousands of individual investors who've benefited from our 37-percentage-point outperformance of the S&P 500.
And the best part is, if you're so inclined, you can try our services out for free just by clicking this link. Don't even think of asking Palfrey for that deal -- she's got legal bills to pay.
Fool contributor Rich Smith would really appreciate it if you didn't mention the joke about the price of massages to his wife. He owns shares of TheStreet.com, but of no other companies mentioned in this article. Microsoft is an Inside Value pick. The Motley Fool's disclosure policy is no joking matter.
