It has been interesting to observe reactions to various newsflow and data flow from various market participants esp in case of PI inds.
I think the key learning is that in the case of companies which the markets perceive as great growth companies or compounders or whatever you wish to call them, markets tend to give a lot of latitude even if the company suffers from a poor runrate for 2-3 quarters. There is the usual correction which is expected out of these nos or newsflows and at the end of these things on the first sign of light at the end of the tunnel, people begin lapping up the stock. Today’s move was probably in response to management commentary airing confidence about the future which re inforces the confidence of investors in the company. Thats not to say we should go out and buy tomorrow morning. Its always great to buy when stock movement is lacklustre.
If we look at things closely the numbers have not yet started falling in place but stock price has moved almost 30% from levels of 600 to 800 plus. Someone who followed the age old dictum of buying great companies having temporary problems would be definitely sitting pretty.
The saga of PI Inds and its stock price in the recent past is a great lesson for us investors to see how investors and stock prices behave to a slew of newsflow and data flow. Especially from the posts put up by different investors expressing their emotions like faith, disgust, lack of confidence in management etc
This thread is a great place to learn market psychology and how to benefit from it.