The Globe's Scott Adams can now be scratched off the list of reputable analysts. While you're at it you might as well scratch the entire Globe and Mail. Then again maybe it's a sign.

Globe says use caution when considering Jaguar, others

2011-02-08 06:03 PT - In the News

See In the News (C-JAG) Jaguar Mining Inc

The Globe and Mail attempts to identify stocks that look like they have negative momentum in its Tuesday, Feb. 8, edition. The Globe's Scott Adams writes in the Number Cruncher column that he employed the services of Morningstar CPMS senior consultant Jamie Hynes to screen for stocks that are falling and have the potential to fall further. Mr. Hynes says there are three key fundamentals that help determine whether a stock will keep falling: earnings estimates have fallen in the past three months, quarter-over-quarter earnings are falling and earnings surprises are negative. Mr. Hynes calls these stocks "potential falling knives." Mr. Hynes tested the falling knives portfolio going back to 1991 and found that it returned just 1.7 per cent annually, versus 9.7 per cent for the S&P/TSX total return index. The portfolio posted a negative return in 15 of 19 years. Mr. Hynes says, "There may be some real bargains amongst these names, but as a general rule, extreme caution is required when trying to catch falling knives." The falling knives portfolio includes Jaguar Mining, San Gold, Northgate Minerals, Westport Innovations, Golden Star Resources, Nevsun Resources and Centerra Gold.