Fortress Global Enterprises Inc - Class A FTPLF

Investors and Price Volitility

[OptsyEagle]

I was reading a commentary from Geoff MacDonald of Edgepoint Weath who was commenting on investor's reaction to price volitility and I couldn't help thinking about how it related to the most recent price action on Fortress Paper.  It seemed to me that investors were more than willing to throw out everything they should have known about the positive prospects of Fortress Paper and replace it with anything they could dream up to convince them to sell, once the price started going down.  Anyway, I found it interesting.  Here is just a couple paragraphs from his discertation.

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As it is impossible to invest in the stock market and avoid short-term price volatility, shouldn’t this be expected? If so, why do "investors" allow that volatility to influence their decisions? Mr. B would welcome the opportunity to sell some of his business to an excited "investor" who feels increasingly smarter as the stock price rises. On the other hand, Mr. B would love to buy more of his business from an "investor" who gets increasingly depressed when the expected volatility that was known would happen actually does happen. Wouldn’t you?

Why does this happen? Our only explanation is that "investors" don’t know what they are buying. There is no other rational reason. If investors knew what they owned and what their investments were worth, they wouldn’t be worried if they had a chance to buy more at a better price. The fact that many "investors" take their lead from the direction of stock prices has to mean they don’t really know what or why they own what they do. It must be a very uncomfortable feeling. Wouldn’t it be like someone who wasn’t trained in brain surgery being asked to perform a brain operation? Or someone who has no knowledge of how to fly a plane being asked to be a pilot?

Price fluctuations do not equate to risk. They simply allow Mr. B to enhance his long-term returns.