Its okay... OCA shareholders can continue selling their shares to me at silly prices.
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Its okay... OCA shareholders can continue selling their shares to me at silly prices.
You make with the loaded question above a number of wrong assumptions. Take an example: If you have a pub brawl with people beating each other up for no good reason, you can safely assume that a number of these "warriors" are intoxicated and behaving silly, but this does not mean all of them are. Same with the markets (no matter which stock exchange).
Just for clarity - I am not implying that most market participants are intoxicated, but there are many market situations where a material number of them behaves that way.
I assume you are aware of the formula Share Price = fundamental value + hype.
The silliness of markets comes from the hype component.
Have a look at securities without underlying value (like e.g. crypto currencies or NFT's) to better understand the impact of the hype component. You can observe otherwise seemingly reasonable people buying absolutely worthless securities for increasing amounts of money, just because they trust the bigger fool theory (or more likely because their reptile brain tells them that something which goes up always needs to keep going up - linear extrapolation) or because they fear to miss out.
These people might not be silly, but they do behave silly.
Obviously - this observation is strongest when your security has no underlying value, but it is as well observable for any stock where hype is just a part of the share price ... like e.g. OCA.
There was a time a couple of years ago where fear (one of the factors impacting on hype) brought the share price down to less than 40 cents, and short after that hype turned around (from negative to positive - FOMO) and the share price went up to $1.60 or so.
Absolutely silly behaviour, given that the underlying value of the investment didn't change during that time.
So - yes - markets (including he NZX) tend to behave silly, even if this does not mean that all market participants are silly. It is enough if a material number of market participants behave silly, as they do.
If you want to be successful as investor, you better learn to embrace this particular attribute of markets and learn how to exploit it.
Ah yes - and for your statement on "collective reasoning" above - behavioral sciences use for this the term "group think". Check this out, and you might find that this is clearly not a behaviour which should inspire confidence.
It's an ok formula, but perhaps not fully reflective of the real world? Let's refine it just a little....
Share Price = Fundamental value (+) Hype (-) Down-ramping.
in regards to market participants' 'silliness', it will operate in the sandpits where both the hyping and down-ramping crowds reside. ;)
but dissecting the nuts & bolts of the financials wasn't downramping .. it had already long hit the bottom
before that happened, along with the rest of the sector :)
The figures and how parts of them have been treated don't lie :)
Perhaps someone will blame one of the more obscure of Political parties next for what the Sector & OCA have traversed in SP movements to lower levels than seen earlier in the 2 years .. ;)
Obviously when share prices were going up in preceeding 2 years to most recent two, there wasn't a complaint, scream or whisper from some quarters :)
Hit .90 today. Definitely on the comeback.
Haha - mmmm. What actually is 'Fundamental Value'?
In terms of a formula: Fundamental Value = Share Price +/- market sentiment ?
Yes the buyer and the seller may have a different view on what it is, and yes sentiment will have a bearing on that view. But remember....those differing views don't necessarily preclude them from coming to agreement on PRICE.
It seems to me that if anything is illusory, then it it would be the market sentiment. Positive/negative sentiment can evaporate as quickly, or slowly, as it was created.