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Some Thoughts on Earnings Misses

Two or three months ago, stocks of companies that missed earnings were considered "innocent until proven guilty." Now it seems that they are "guilty until proven innocent."

Cases in point today are Gamestop and Hot Topic, which are getting hammered. But they are only giving back their recent gains. Consumer goods stocks have rallied more than most in the recent upswing.

I used to own Hot Topic, at less than half its current price, below book value. I can't sell it today, haven't done so earlier. But I would if I could (but I don't have a short mandate). 

A stock selling around book value, Graham and Dodd style, has a balance sheet to fall back on. A stock selling at a multiple of book is hostage to earnings.