Yesterday, this happened.

That’s the one day chart for Google, and as you can see, the stock had an interesting day. It all started around noon, when communications company R.R. Donnelley accidentally released Google’s third quarter earnings some 4 hours early. (Quick! Click that link before the Globe puts up that paywall.) Google’s earnings were pretty bad, coming in at $6.53 per share, compared to expectations of $8.76. The market responded immediately, sending the stock some 9% lower, until the NASDAQ made the decision to halt trading on the stock to sort out all the chaos. There was a small recovery once the stock traded again, but the damage was done. Google ended the day down some 8%.

Why were results so bad? There were a couple reasons. The company acquired Motorola back in 2011, and results haven’t been good. Motorola itself lost over $500M the last quarter alone, and people often forget that Google doesn’t actually make a dime off licensing its Android operating system for smartphones. This is looking like a worse purchase than that time I bought a whole bunch of condoms for that Craigslist organized orgy.

Meanwhile, Google’s cash cow, online advertising, also showed weakness. More people are searching for stuff on their mobile devices, and Google hasn’t quite figured out how to monetize that. Sure, they’re growing mobile advertising revenues, but there’s no doubt the desktop market is more lucrative for the company.

If you multiply these earnings by 4 (I know, not a perfect metric, but hear me out) you get annual earnings of $26.12 per share. That puts the stock at 26.6 times earnings, which is pretty rich for a company that just posted crappy results. So while I followed this whole thing with interest, I’m obviously not buying the stock anytime soon.

Cue the knee jerk reactions.

(Aside: I’m 99.9% sure Brig thinks I hate her. Go here for further confirmation. I really don’t. It’s just, well, she makes it so easy. I can’t help it. It is my kriptonite.)

Anyhoo, don’t do what Bridget does. Don’t buy stocks without doing proper research first. Now, in her defense, she didn’t actually buy it. But she sure wanted to.

I am not a believer in the efficient market theory. I believe, like every other value investor, that pockets of value exist in the market, for various reasons. Sometimes, the market doesn’t look past a company’s short term problems. Other times, companies can be small and unloved. Or, like cigarette companies, people overlook their outstanding profitability because what they do isn’t exactly ethical.

The point is, I think there are pockets of value in the market. You’ve just got to put in the work to find them.

Which is why I get so upset when investors view stocks as they’d view a pair of shoes. They think “hmm, this stock is 10% cheaper than yesterday. Therefore, it is a terrific buy. I like buying things on sale.” This is a really bad attitude to have when investing.

Say you bought one share of Google today, for the closing price of $695. Assuming you started your research at 1pm eastern time, (around when the stock was halted) you would have had a maximum of 3 hours to research the stock. Assuming you read annual reports regularly, that would give you enough time to get through Google’s last one.

Meanwhile, the last time I traveled, I guarantee I spent more than 3 hours comparing the prices of flights and hotels. Hell, for a while there, Hotwire temporarily replaced porn as the most visited site on my computer. My total flight cost: around $750. The hotels were maybe $1000. Why will people research for hours to save a few bucks on a flight, yet shun research when investing?

We all know the answer: because it’s hard. Learning accounting is hard work. Reading annual reports are boring. Math? NOBODY TOLD ME THERE’D BE MATH. Yeah, I get it. Believe me, I’d much rather be watching baseball playoffs than poring over Research In Motion’s latest quarterly numbers. But I do it, because I owe it to my money.

Nobody expects you to become the next Warren Buffett. Hell, we barely expect you to amass the investing knowledge of Jimmy Buffett. But how do you expect to ever become a decent investor if you don’t even try?

Here’s what I do when I’m interested in a stock:

– I read the last 3 annual reports. (although, admittedly, I start with the most recent and skim much of the other 2)

– I read any quarterly releases the company has issued since the last annual report.

– I check to see whether company insiders are buying or selling shares.

– I read a few investing websites and message boards, seeing what other investors think about the stock.

– I’ll then write up a piece on the company, (these days I write those over at Seeking Alpha) and see if other investors tear it to bits.

– Then I might buy.

I’ve only ever timed my research process once, when I looked at investing in beleaguered Japanese electronics manufacturer Pioneer. It took 10 hours of research for me to ultimately pass on the company. (Mostly because they still manufactured their wares in Japan, making them horribly expensive.)

You might just think that’s excessive. And maybe it is. But do you see the huge gap between what I do and deciding to buy a stock just because it went down one afternoon?

You’ve got to crawl before you walk, and walk before you run. It’ll take hard work and dedication to get to the running stage. If you’re not willing to put in the effort, stick to investing in mutual funds and indexes. If you’re gonna buy something without researching it first, stick with shoes.

Tell everyone, yo!