I understand your logic, but I disagree on a couple of points. To give a sell signal really infers 'get out now', and that means everyone gets out at a lower price since the sell pressure is likely to greatly exceed any market for the stock. It also sets a psychological cap on any recovery, because it is likely to increase the tendency for profit taking at any hint of price recovery. Thus in the case of CNSI; my hold recommendation had the intent of suggesting that people stay put, the stock price remain around 4 pending TBI data, which could bring the stock back up to 8. A hefty potential profit, but at a current level of uncertainty and risk which I felt made it not an optimal 'buy' for those 'shopping' for a fresh biotech holding. Since it was interpreted as a 'sell', the stock went down to 3.25 or so, near cash value which makes it more attractive, albeit with some taint, so that people are likely to bail out too quickly. This represents the oversimplistic binary thinking of the market, to buy or sell depends on company factors, market factors, and individual considerations such as taxes and tolerance for risk. Keep in mind that sell-side analysts use 'Hold' as a euphemism for 'Sell' because they don't want to anger the company in question, and risk losing present or potential investment banking/underwriting business. Since I have no such secondary agendas, I don't need euphemisms. Unfortunately, the market is so used to the idea that one must read between the lines that they actually misread what is actually there. Ironically, by misreading my Hold as a Sell, the market moved CNSI closer to being once-again a Buy, since it is trading near cash value. It's all somewhat silly.
NeuroInvestment |
