FWIW--
Some reflections on the last earnings report from a somewhat pompous psychologist who has researched motivation.
Altho the news was good, quite good, I was disappointed when they were "only" .55, meeting expectations.
All judgements require the matching of an event with an expectation, and because of the plethora of very good news, our expectations probably began to soar. Therefore, when the news was "merely" excellent, it led to disappointment on the part of investors. Recall how many pundits predicted that AMAT was on their positive surprise list as exceeding expectation.
By predicting that expectations will be exceeded, we are naturally raising the expectations, hence the negative surprise and the drop in price when the news did not meet the inflated expectation.
Furthermore, psychological research on risk indicates that as we have more to lose, we tend to protect our gains. The background, for the whole market, was one of creating investors with a great deal to lose. Given the enormity of gains of '99, many people became risk-aversive and took their money to safer havens, leading to the NASDAQ drop.
I think that the specific high expectations of AMAT's earnings and the general move to safety led to the recent price drop.
I expect that we will see a slow return of these investors and a rise in the market as people see more evidence of the potential of several very good companies. I don't expect a repeat of the huge gains that we have experienced, tho.
We'll see...
fred |
