As I mentioned before, sanity and rationality are actually tools that are not applicable to all situations. If you look back at the final days of your last several romantic relationships, you would probably agree that injecting sanity and rationality into those situations would not have been the slightest bit helpful.

Similarly, if people are irrationally fond of something, you are best off avoiding the situation entirely. You could hang out at the entrance to a Backstreet Boys / N Synch / 98 degrees concert and try to convince the teeming masses that Ella Fitzgerald and Louis Armstrong are better. But you aren't going to have much luck. And just because you know all the merchandise they're moving now will one day wind up in landfills, that doesn't mean you should short the vendors today.

That all having been said, you CAN actually make quite a bit of money with fad stocks. Pretty much any fad stock (Coleco, Home Shopping Network, Toy Biz, Juniper Networks, Starbucks, Krispy Kreme donuts) could be bought at any point in the uptrend, sold at any point the downtrend and still make the "investor" insanely rich (or insanely break even or only slightly down). By comparison, that same investor who tries to buy a sensible, conservative investment in a cyclical industry has to time market cycles and understand the macroenvironment and analyze cash flows and do all sort of other very tedious work which has a lot of room for error.

So fad investing is actually superior to real investing on a number of levels. It's just not my particular strategy. (Though I did jump into PIXR and plan to ride it up through the summer).

Now when we look at KKD vs JBX, we see that JBX actually BEATS KKD on almost every fundamental level. Their valuation is much lower. Their margins are a little better. Their turnover is faster. Their return on invested capital is better.

Where KKD beats JBX is- growth rates much better in all categories, no debt, much better financial strength (KKD quick ratio 1.31- JBX 0.12), and revenue and income per employee are higher as well.

So KKD has something going for it. If they had the same valuation, you'd be better off with KKD than JBX.

Krispy Kreme does have a pe of 114. However, it also has a 5 year eps growth rate of 114%. If it continues at this rate, it will pay back its price in earnings in 6 years.

The median dow stock pays back its earning in 11 years by this measure. If KKD were to pay back in 11 years, it would have to grow at a 37% rate for the next 11 years.

Certainly, that's a pretty hefty road to climb, but it's not insurmountable and it's not historically high for KKD. Their 1Q eps growth is 47%. 1 year is 76% and 5 year is 114%.

By comparison, JBX sells for 9 times earnings and has a 5 year EPS growth rate of 49%. At that rate, they would pay back their earnings in a mere 4 years. To pay back in 11 years and be as expensive as the broader market, JBX would have to grow earnings at the rate of negative 4% or better.

So JBX is a safer bet, but KKD is poised to take over the entire world. The only problem is, KKD is priced as though they've already taken over the world. Maybe they will and maybe they won't. I'd rather have my money is JBX, but like I said, that's only because it fits my strategy better.

I'm sure there's plenty of loopy shorts and longs on the KKD board. Let them have their fun I say.