The Oprah Effect

Lured by the Oprah effect, I bought some shares of Weight Watchers when she endorsed the company — and when the stock fell, I didn’t sell! Ugh. Buying the shares was an emotional decision, though I have worked in the health and wellness arena my entire career and wasn’t exactly buying blind. I knew the Weight Watchers way of eating is sound. I never read anything about the company’s financial condition, management or growth strategy, though. I just put my money on Oprah. Lesson learned. — Jane Diamond, Philadelphia

The Fool Responds: The Oprahand-Weight-Watchers story wasn’t over when you shared this experience with us about a year ago. On the day in 2015 when Oprah announced she was an active investor in the company, with a 10 percent stake in it and a seat on its board, shares more than doubled. They surged further — and then began retreating.

It’s generally a positive sign when a major investor makes a significant commitment to a company, but that’s not enough.

Weight Watchers had been struggling with increased online competition and declining demand and revenue, and it ended up replacing its CEO. It has been turning itself around, and since you wrote to us, shares have quadrupled. A lesson here is that it’s good to be very patient if you really believe in a company and its prospects. If you don’t, though, sell.