I disagree with you. What I said is exactly the reason SEBL is going down. It's current valuation is too high to support the news that is out. All those things I stated in my last post instill doubt in investors minds. The market is ruled by perception. There are no rules on why a stock should be priced a certain way, only investor perception influenced by news that is true or not true. The company could come out and say the qr is on track, that would be true news unless they unintentionally lied from lack of good visibility, which many companies have done. If SEBL said all is fine and the current valuation is acceptable to the market, SEBL would most likely stop going down, and then all the current news would be priced in until more news was release from the company or somewhere else. Take ORCL for example. Why is ORCL not going down anymore? Because the warning ORCL release is priced in. In other words investors have the digested the facts and priced it in already.
Here is simple example. DELL is up about 11% today while SEBL by far they better company is down about the same amount. Why? All the bad news has been priced in already in DELL, and investor perceive DELL to be cheap at these prices, where as SEBL had great earnings, and issued a good forward looking outlook. Since SEBL earnings, doubt has been cast on the forward looking outlook from various angles. Until the doubt is erased by fact or time, and is priced in, SEBL will go down. You see, it's all about buying stocks at the right time in the cycle. If you want I'll coin a new term, Investors Perception Cycle. <g>
One more. Obviously, perception is also influenced by price direction. That's called feeding on itself. I'm aways on the look out for and hope to catch the anomalies in the market. So, I'm looking for them to sell it down too far.
If the above never happen, stocks would just not move.
Greg |
