I.N.Vestor,
You are right about the volatility of the stock over the past year -- from hardly 4 to 10+ and back, with spikes in between. I was pleased with how well the stock held up in the 8 area through the market's gyrations through the October crash, but then came November and its fall from grace.
I think, however, that this price history supports my point of view. I am not claiming that no news implies price stability -- but I do reject the claim that (more) news necessarily implies (more) price stability in this sort of case. The question is not price volatility versus price stability, but the degree of price volatility. By their nature, the stock prices of speculative hi-tech startups are volatile because they entail great risk and some possibility of great gain. Given such prospects, those who buy and sell the stocks naturally agonize over every iota of news or rumor that might affect their fortunes. Nobody holds these things for the dividends! I have to think, then, that reporting every up and down of the development process risks jerking the stockholders in and out of the stock to the ultimate benefit of only the brokers and a handful of lucky traders (the rest of whom will have their clocks cleaned).
So where are we left? You point to the harm of too little; I point to the harm of too much. You worry the stockholder can be blindsided by not knowing something relevant; I worry that he can be misled by something of no ultimate consequence. In my opinion, we have to rely on management to seek a balance in light of the shareholders' long run interests and to treat all shareholders equally, and we have to do our own due diligence to confirm or reject its judgement. In the end, though, we must all understand that once a new bit of information is released by management, the stock price will adjust immediately. No investor can expect to be the first through the door, in or out. Price volatility is what you sign up for when you buy a speculative stock. I just hate to see it needlessly exacerbated. |
