a miner one barejetn?
and cograts on your win
Printable View
Ha Ha, "Squiggly-Lunes"
Hoop - Who is Mr. Market? It's exactly that same aggregate group of investors who were long in this stock (back at that point in time) and the benefit of hindsight definitively proves to us that those investors who stayed long got punished. To be more concise to the point.. they mis-valued the stock.
That aggregate group (on a given day) will be comprised of an eclectic mix of "investors", from pure fundamental investors (of the Benjamin Graham variety), to momentum traders, to technical traders all the way down to casual retail investors and to pure speculators.
Now whilst I can't speak for the others, from the significant advantage point of having hindsight, any fundamental investor who stayed long in this stock at those (significantly overinflated) levels clearly got it wrong however this alone doesn't disprove the merits of fundamental investing, in fact it strengthens the argument of it..
All investors (and this likely includes traders, technicians and speculators) will fall on the spectrum of talent. Some have it, some clearly don't and the vast majority are peppered in-between. The fact that such a spectrum exists again goes back to my earlier point/quote (highlighted above) about the existence of opportunities.
When the Mr. Market (essentially an aggregate group of investors) mis-prices a stock relative to its fundamentals (i.e. gets it wrong), then this creates opportunities for those who will get it right (generally those with more talent). This concept is nothing new, its generally referred to as generating "Alpha" or "the alpha co-efficient", which can defined as excess returns, or more succinctly as "talent".
You mention above that the fundamentals have changed and the market has corrected. I don't believe this to be the case. The fundamentals of a given company at a given point in time (whether an investor knows it or not) are essentially the facts of the company. The Market/Investor is not privy to a full view of the facts (i.e. every single facet of the company), so in reality they are reliant on their "perception" of these facts, as interpreted by a set of numbers which are generated under a array of accounting assumptions. In addition to their perception of these facts/fundamentals of a company in its present time, a given investor will also have a view as to what these fundamentals may look like in the future, i.e. they are projecting.
If one knew the fundamentals of PEB omnisciently, it may be that these facts haven't really changed a lot in the past few months/year. Things may have been steadily on track for its commercialization process, the company may have achieved several notable milestones, the awareness of which suddenly sending the stock price into the stratosphere. With lofty prices comes lofty expectations and suddenly investors are hungry for news, good news, great news, or any news really, as long as it is evidencing progress. Meanwhile the company is continuing on its path and is expecting to meet its modest sales target. The ravenous investors on the other hand are expecting big things and when the sales aren't big (or big enough to justify the price) suddenly the company is doomed, the sky is falling and its time to dump their shares and run to the hills.
Now a shrewd fundamental investor may have seen this all coming, quietly realizing the stock-price is continuing to edge up to unfathomable levels despite nothing materially different having occurred with the underlying company. Sure some agreements have been signed and the stock has "de-risked" (whatever that means) in terms of its commercialization process. The sales funnel he notes has yet to have formed and the cash-flow is far from sight. Progress for both is a long way away and as such he is unable to see how the company is suddenly worth an extra $200 million in terms of its market capitalization.
He sells. The stock price continues to climb. Maybe he was wrong, but then again he profited sufficiently (without taking on additional risk). Others tell him that he is wrong and this company is going places (or at least the stock is..) and they remind themselves that they are right (in fact many times over). One day the stock starts to turn and the dream starts to come crashing down. The knives are out and people start down-ramping the stock.
The moral of this story is three-fold:
1) There are a range of investors out there who lie along the spectrum of talent. These investors collectively are Mr. Market.
2) The fact that this very spectrum exists allows for some investors to outperform others (at their expense). This becomes significantly more evident in the long-run. The existence of this spectrum and the undeniable fact that its participants are human leads to an abundance of opportunities in the market for any investor to exploit.
3) Fundamental investing isn't a science nor even an art. It's a sport, or more specifically a blood-sport and some are more talented at it than others. In the long run they will win more than they lose, and investing by its nature is a winner take all sport.
im sure that your third point could be hotly debated--But interesting non the less--Im sure the next report will make those fundamentals a bit clearer(at least a bit) ATM its like trying to put together a puzzle without all the pieces.
Well done to both of you for both sides to an ongoing story.
Alas, I fear it will never end
I don’t know if TA really works or not as I gave it up after only a couple of years, wasn’t working for me, happy to reserve a conclusive judgement though on that basis, perhaps it needs a decade to master, or perhaps it’s all just hooey, each to their own. But, the oracle didn’t get to be a billionaire without being a wise fellow.
"I realized that technical analysis didn't work when I turned the chart upside down and didn't get a different answer." – Warren Buffet
http://www.fool.com/investing/value/...rs-of-bet.aspx