I Love You, Your Perfect, Now Change

By Tim DyerIn the spirit of Valentine’s day, I remember an off Broadway show I saw here in San Diego a few years ago. It was called I Love You, Your Perfect, Now Change. It was a witty and comical view of some of the stereotypical nuances of dating and relationships. The play's tagline is "Everything you have ever secretly thought about dating, romance, marriage, lovers, husbands, wives and in-laws, but were afraid to admit." (Wikipedia)   If we subtract dating from the above tagline and insert "investing" or "wall street" I think you'd get a similar comedy about what is known but afraid to admit.

I was reading a blog post by Bespoke Investment Group that illustrates this point regarding shares of  Ralph Lauren (ticker: RL). The post highlights an unnamed Wall Street analyst, who while looking at the companies fundamental data maintains an Underperform rating on the stock for over two years. During that same two year period the stock of Ralph Lauren appreciated over 175%.  It looks like the analyst finally threw in the towel last week, after the company announced earnings, rallying another 8% to reach all-time highs.  His recommendation finally changed to "Neutral".  Wow, thanks for that!

Bespoke RL blogpost

Source: Bespoke Investment GroupJust like in relationships things are always more complex than they can appear. We need to make decisions and even in those rare times “admit we are wrong”.  Looks like the analyst  needed to give a little more love to a stock whose trend was up. I'm sure he could heed the advice of an old Broadway show regarding his recommendation, “I love you, your perfect, now change”.