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Misdirection

Sigma Investment Counselors

April 4, 2018

According to Wikipedia, misdirection is a form of deception in which the attention of an audience is focused on one thing in order to distract its attention from another.  While misdirection has generally been associated with magicians, CEOs have not been immune to the opportunity.

Investors should be careful in reacting to corporate announcements that seem to be only marginally related to the most material aspects of a companies primary business prospects.

For example, if a company is going to report some bad news, such as disappointing earnings, management may take that as an opportunity to announce some potentially positive news relating to a future event or opportunity.  This is not to suggest that the long term outlook is unimportant, however, investors may want to be careful to not become too taken by the long term potential, while overlooking significant near term issues.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA

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