So we know where to look, but how will we know over-hyped stocks when we see them? Well, the numbers involved will be abjectly awful, and as in all cases when the numbers are awful, there will be an accompanying story explaining why, for the stock in question, the awful numbers don’t really mean what they seem to mean. So, we will take those stories out and kick them around a little to see which ones hold up and which ones fall apart. If the stories fall apart, then the stock is likely to fall apart as well.
But wait, you may think, might not there be a reason why the numbers don’t mean what the seem to mean that Mr. Julian simply doesn’t know about or can’t see? Might he not get it wrong? Thank you for asking. Yes, I might very well be missing something, and I ask that you never take my word alone as reason enough for anything. What I do ask, is that you consider these ideas what they are, ideas, and do your own research before making any investment decision.