Fool crowd gives Palm the dreaded one-star rating
In The Motley Fool’s 135,000-member CAPS community, stocks are rated on a scale of one to five stars, based on member ratings. One-star ratings are the CAPS’ equivalent of a flashing red warning beacon.
Palm (Nasdaq: PALM), known originally for its Palm Pilot and later its Treo, sports that dreaded one-star rating. Although the company was an awe-inspiring pioneer of the mobile technology market during the Internet boom, it fell on hard times after the bubble burst. It has since found itself on the losing end of competition with foes such as Research In Motion and Apple.
Since December, Palm’s stock has absolutely been on fire, multiplying in value more than eight times. The CAPS community, however, has not budged from its one-star rating. So what gives?
Well, CAPS member “SpoilsofWar” gave the stock a thumbs-down, saying that the company is “running on fumes even if the Pre (phone) is a hit.” Member “SBeren” suggested that consumers will find the Pre too expensive compared with competitor offerings. Member “fmahnke” said that the stock’s valuation “defies belief.” More bullish, member “SreeRama” praised the company’s product pipeline and management, and suggested that the company might be an acquisition target.
Visit our CAPS community at http://CAPS.Fool.com to read more opinions and offer your own. (Apple is a Motley Fool Stock Advisor recommendation.)
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My dumbest investment
During the tech bubble, I bought shares of Zapata, a company known for selling fish oil. It announced it would be purchasing Internet sites. The stock went crazy, and I bought in. This is an example of the craziness that was going on. How dumb is that? Buying a fish oil company that was going to acquire Web sites? After unloading many stocks after the bubble burst, I had more than $35,000 in losses that are slowly being used to offset income. – Primo, online
The Fool responds: That was indeed a time of investing euphoria and “irrational exuberance.” Zapata was an animal byproducts company that also made sausage casings. It would appear that, like many investors of the day, Zapata didn’t want to be left out of the skyrocketing prices of many Internet-related companies. Selling after a bubble bursts isn’t always the best thing to do, as many fallen firms will recover, eventually. It’s best to recognize bubbles early and to get out early. Learn more in John Kenneth Galbraith’s book “A Short History of Financial Euphoria” (Penguin, $14).