<<So do these WILD SWINGS in price with UNCHANGED FUNDAMENTALS mean that "valuation" is irrelevant in these primarily story-driven stocks? >>
Peter: I enjoyed looking at the comparison charts.
If you look at each of the individual charts, you may notice that the peaks and valleys of the "wild swings" or RollerCoasters coincided with the point where the stock price went or ceased to be above or below its average.<g>
<<Well, no. In the SHORT RUN, it is certainly MORE IMPORTANT to be able to FORECAST THE CROWD'S BEHAVIOR than the underlying company's behavior. But in the long run, the COMPANY'S BEHAVIOR will dominate...>>
I respectfully disagree with that statement, as I think what is IMPORTANT is to know or ask the question: "WHAT IS THE TREND?" and the answer to that question doesn't need to be FORECASTED it can be simply seen or answered by looking at the relation of the price to its short and longer term averages, by doing that one should easily establish wether the trend is UP or DOWN <g> and the action to be taken of course depends on many variables or "individual considerations" <g>.The first one of those is wether one is looking on a "short term" or "long term basis"; wether one is trading on a "taxable" or "non-taxable" (IRA,401K, or ROTH etc.); the cost of the commission for a "round trip" (in the old days it was substantial, now a days it could be just $10 for a 5,000 shares block); wether one is trading on a "cash" or "margin" basis; wether one can sleep well and is not subject to bouts of insomnia, etc.,etc.<g>
Bottom line: I think the TREND has to be factored in at the time of trying to peg or determine a "valuation figure".
RAGL
Bernard
P.S.: I agree that on a long run, the COMPANY'S BEHAVIOUR or FUNDAMENTALS will dominate. |
