The Pitfalls of Sell-Side Research

After appearing on "The Strategy Session" on Thursday, Bob Olstein, chairman and CIO of the mutual fund company Olstein Capital Management, continued the discussion off-air with Gary Kaminsky. Among the topics: how sell-side research has changed as a result of trading in the moment.

"Everybody is in the minute trading. What is the market doing in the next 30 seconds? What's it going to do next month? And that's creating tremendous opportunities for the dinosaurs who look under the hood," Olstein said.

"Very few people are looking under the hood at the accounting, and differentiating what they are reporting and what they are actually earning in terms of free cash flow," he added.

For example, when Intel missed the quarter (two quarters ago by a nickel), "you saw all the sell-side analysts lowering there so-called target from $28 dollars a share to $20 dollars a share. Well that means the company is now worth 45 billion dollars less just because they're lowering their target on the company because they missed by a nickel," Olstein said.

Check out our entire conversation with Bob Olstein in this web exclusive to see which two key metrics investors should keep in mind when looking at a company's report.

Follow Strategy Session on Twitter: @CNBCStrategy

Watch CNBC's "The Strategy Session" weekdays at Noon ET