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Technology Stocks : Dell Technologies Inc.
DELL 133.20+5.7%Nov 26 3:59 PM EST
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To: Frank Ellis Morris who wrote (145881)10/27/1999 10:41:00 AM
From: GVTucker  Read Replies (1) of 176387
 
Frank, RE: What ever happened to stocks being rewarded for good or superior earnings??

It all depends on how much the market has already discounted. If everyone expects a company to report good/superior earnings, then the stock logically will not move when that information is revealed. In fact, this also explains why sometimes stock prices drop after these good/superior earnings are announced. If some people have bought the stock as a trade in the mistaken belief that the market has not already discounted this information, they are selling into a market where all the other participants have already realized this good information long in advance. Hence, the stock 'inexplicably' drops.

Same with the recently reported IDC numbers. I read with some amusement all the posts here by people who were 'amazed' that DELL's stock price didn't go up because of the IDC announcement about DELL's number 1 market share in the US. Think about it--everyone had expected that announcement. I certainly did, and I am probably the most pessimistic here this side of LT and Fleck. That information was already priced into the stock.

Understanding what information is incorporated into a stock's price is probably the most difficult aspect of securities analysis, and the last thing for most people to learn. That is why good companies and good stocks are NOT the same thing. The last four years have given many neophyte investors the impression that they are the same thing, because that strategy worked. History has shown that this is not a trend that has to continue.
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