As an investor who is constantly on the lookout for information and trying to learn more about a company than what one can get from reading annual reports and SEC filings, I often find myself lured by headlines that don't deliver the goods.
Today's stupid headline winner is Anheuser-Busch, Coca-Cola Shares Slide from the Associated Press. Both Anheuser-Busch (NYSE:BUD) and Coca-Cola (NYSE:KO) were downgraded by an analyst at Goldman Sachs (NYSE:GS), which can be interpreted as newsworthy.
My problem with the headline, however, is the word slide. To me, the word implies a material decline in the price of the shares. This headline intrigued me, because I've been looking to pick up shares in one or both of these companies if they were to fall a bit. But when I pulled up quotes on Coca-Cola and Anheuser-Busch, I found that they were only lower by 0.41% and 1.02%, respectively. To me, such small losses do not qualify as a slide.
Surely, I thought, the shares must have suffered a much steeper decline earlier in the day, and that was the cause for the headline. But the most Coca-Cola has been down today is 0.94%, and Anheuser-Busch was down only 2.02% at its low point. That's still not enough to warrant the use of the word slide.
The point of this little rant isn't to give a tongue-lashing to the AP or any of its writers. Truth is, there are worse headlines out there. Instead, I'm trying to chide myself and those of you out there reading who occasionally don't think critically when reading a headline or an article about a company.
For example, I've owned shares of Starbucks (NASDAQ:SBUX) for more than seven years now, and Starbucks routinely posts impressive same-store sales growth that the market eats up. On occasion, I will chime in with my own opinion of Starbucks' sales performance. Despite trying to be fair and unbiased for readers -- and to properly evaluate the company for my own needs -- I think it's just about impossible for me to be completely unbiased, because of my holding the shares.
I don't think it's altogether different for a reporter who reads a negative analyst report, sees that the price of the stock is falling, then has to write a story and a headline. Besides, every journalist knows that sensational headlines grab readers' eyes. After all, I did click through to read the story on Bud and Coke.
Take headlines with a grain of salt, folks, because they're like belly buttons: Everybody has one. At best they're benign and won't be any help to you in determining if an investment is really worth considering. At worst, they stick out, look funny, and are misleading.
Anheuser-Busch and Coca-Cola are Motley Fool Inside Value selections, and Nathan really does think their stock prices are interesting values.
Nathan Parmelee owns shares in Starbucks, but has no financial stake in any of the other companies mentioned. The Motley Fool has an ironclad disclosure policy.
