As most of you know, I am a dyed-in-the-wool chartist. I base my decisions on charts and very little else.
There are rare occasions, however, when an investing idea is based on something more than just the chart. Such was the case with Devry, which is one of those for-profit education outfits.
Simply stated, I don't think I've ever seen a group of "customers" as unhappy with a given service as I have with the field of for-profit education. I'm not picking on Devry in particular – – there are many firms out there (ITT Institute, etc.) But as one surveys the landscape of the "graduates" from these "schools" (I am not accidentally using all these quotation marks….) it seems to be a bunch of folks that feel very ripped-off.
From what I can tell, it goes something like this:
(a) a given person is unhappy with their lot in life, particularly with respect to the nature of their work and salary (or lack thereof);
(b) they see one of the countless advertisements on television (often broadcast during the daytime, when unemployed folks are home) touting how such-and-such a "college" will give them the degree and prospects to make their dreams come true;
(c) they enroll at the aforementioned school, taking out huge loans in exchange for what is, let's face it, probably a pretty lame educational experience;
(d) once they have their diploma in hand, they head out into the world of work and find out that – – well – – employers aren't very dazzled by their diploma (or the knowledge gained to earn it), so the satisfying, big-paying job the graduate was hoping for doesn't materialize;
(e) and yet, my goodness, now there's a big-ass student loan to pay
I've seen these ads all my life, but until I read some of the testimonials from folks who have been to these places, I never realized how badly shafted these poor saps felt.
So, based on this – – and based on a not-too-terrific pattern in the chart, I shorted DV yesterday. It didn't take long for me to gain satisfaction, as the stock tumbled nearly 10% at one point. I went ahead and covered the short, but frankly, I think that – – long-term – – these education stocks are going to be a lot lower.