Cockroach Theory (1990)
Bapopik at AOL.COM
Bapopik at AOL.COM
Sun Sep 7 00:44:17 UTC 2003
I heard this again just recently. It's also known as the "one cockroach theory" (There's never just one.) Also, in business theory, "bad news travels in bunches." It's not recorded yet?
Did I do this right? There's not a single hit on the WALL STREET JOURNAL's full text?...Ancestry.com didn't help (see below)...Investopedia.com has a nice selection of financial "buzz words" that includes this term.
`Cockroach' stocks: Bug and boon:[FINAL Edition]
Paul Wiseman. USA Today (Pre-1997 Fulltext). Arlington, Va.: Jan 30, 1990. pg. 03.B
Wall Street is crawling with cockroaches these days - ``cockroach stocks,'' that is.
A company wins that dubious distinction simply by coming out with surprising quarterly earnings. ``The theory is that, like cockroaches, you rarely see only one earnings surprise,'' explains Melissa R. Brown, director of quantitative analysis at Prudential-Bache Securities, where the cockroach label originated.
If a company posts bad news one quarter, chances are 35% to 40% that it will issue another disappointment the next. Same goes for positive earnings surprises, Brown says.
Those odds are good enough for Brown to recommend selling a stock - or going short in it - the first time it's hit with disappointing earnings (provided there's no other reason to hold on). Likewise, it's often a good idea to buy a stock after an unexpectedly rosy report. After the second surprise comes out, Wall Street usually catches on: Analysts start rewriting their earnings estimates and changing their recommendations, she says.
Other market watchers also subscribe to the cockroach theory. ``We tend to agree with the adage, `There is no such thing as one earnings surprise,''' PaineWebber's Edward M. Kerschner wrote in a report earlier this month.
Investors tiptoe through earnings minefield:[FINAL Edition]
James Kim. USA Today (Pre-1997 Fulltext). Arlington, Va.: Mar 22, 1991. pg. 01.B
- The size of these ``earnings bummers,'' as Mark Stumpp, market analyst at PDI Strategies, calls them, are taking traders by surprise. IBM didn't say its earnings would be 5% lower this quarter than last year. It said earnings would be down 50%.
- The economic recovery may be in jeopardy. If earnings are worse than expected this quarter, they might be worse in the second and third quarters, too. Maybe the recession won't end this summer after all.
It's impossible to know which companies are most vulnerable. Analysts who follow specific stocks have been as surprised as anyone by the bad news this week.
Stumpp says be aware of the ``cockroach theory - if there's one around, there are usually others.'' If an industry leader is suffering, it's a good bet that others are in the same position. Given the IBM news, technology firms are one danger zone.
From: Maurice E. Suhre (suhre at meltami.dsd.trw.com)
Subject: Re: Could somebody please explain stocks with extremely high yields?
Date: 1992-01-22 15:38:17 PST
It does lead to the oddity that a company omits, say, $1M in dividends and subsequently sees the market capitalization drop $100M! Or some such numbers. This phenomena may be a results of the cockroach theory of investing :-) To wit: when you see one cockroach, there are usually a lot more that you don't see. Similary, when an item of bad news comes out, there may a lot more in the wings. So there are a lot of sellerson the first piece of bad news.-- Maurice Suhresuhre at trwrb.dsd.trw.com
14 November 1973, MARION STAR (Marion, Ohio), pg. 26?, col. 1:
Texas Christian, the original cockroach, also gets a chance to prove Darrell Royal's cockroach theory. Royal, of course, is the Texas coach whose team can clinch a sixth consecutive trip to the Cotton Bowl and a tie for the Southwest Conference championship by defeating TCU.
"What a cockroach doesn't eat or carry off," Royal said about TCU--and spoilers in general--a few years back, "it falls into and messes up."
PLEASE KILL ME (continued)
No one checks. No one can Google. No one? NO ONE??
Once, in a million zillion years, just once, ONCE, ever, can my work be there, and my name, too?
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Times Colonist (Victoria)
September 3, 2003 Wednesday Final Edition
SECTION: Life; Pleasures of the Table; Pg. D1
LENGTH: 680 words
HEADLINE: The hot dog and its humble beginnings
SOURCE: Times Colonist
BYLINE: Pam Freir
The names Charles Feltman and Nathan Handwerker mean nothing to most people - a curious oversight indeed considering their culinary legacy: it was these two guys with forgettable names who introduced a snack-smitten North American public to the hot dog.
Feltman, a German immigrant, started it all in the 1880s. He had a pie stand on Coney Island and was doing pretty well until hotels started popping up everywhere and eating into his business. So he switched from meat pies to sausages. He made them himself with ground beef and pork, pork juice, ginger, mustard, paprika and various other unrecorded spices. They were smoke cured, cooked in hot water, and served in a bun with homemade mustard and sauerkraut. He sold them for 10 cents each and the beach crowd ate them up. But Feltman didn't call them hot dogs. They were frankfurters.
In fact, they went by various names: frankfurters, weiners, red hots and even, because of their doggie-like configuration, dachshund sausages. The name frankfurter comes from what many believe to be its city of origin: Frankfurt. Wiener, on the other hand, suggests Viennese roots. But the frankfurter's legitimate birthplace remains a puzzle. In fact, disclaimers abound: in Frankfurt it's called a wiener. And in Vienna it's called a frankfurter. But the name hot dog is undeniably and proudly American. And that's another story.
The hot dog's official christening was an inadvertent one. A New York cartoonist named Tad Dorgan happened to be at a New York Giants' game in 1901 when this novel snack - the dachshund sausage - made its ballpark debut. Impressed, Dorgan did a cartoon commemorating the event. However, he didn't know how to spell dachshund so he called them hot dogs instead. And that's how they've been known ever since.
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