Juan,
Your friend's comment that only revenue-producing deals will help the share price is not completely true. For example, if you look at the long-term chart for Foster Wheeler Corp., (FWC), you can see that in 1949, their earnings were 6.62 and the stock price was in the 15 range. In 1957, the earnings were in negative territory at MINUS 1.39, and the stock price was at a high of 66. Does this make sense?
If you are a fundamentalist, please explain this to me. This is not an isolated case. Happens all the time. In 1960, when the earnings were back in postive territory, at 4.32, the stock price dropped to 25. Does this make sense? When earnings came out this year for IBM, and they were fantastic, why did the stock price drop?
My point is that the psychology of the market does not always make sense, and anyone who reads it by sensible rules will often make mistakes. WHat does make sense is this, Buy low, sell high. If Fonx were trading at 18, given all that you say about mismanagement, and you bought at .75, would you care about the mismanaged finances, or that the insiders paid themselves too much at the expense of the shareholders? The bottom line is profits. You want to make profit on your investment. Nancy |
