RE:Why is the stock down? I'm very bad at sarcasm, so I'll take that as a legitimate question....
Why is the stock down?
To answer this question, we have to look at several things here, and the first one is the seperation of Church and State so to speak.....
Concept A - Efficient Market Theory(EMT):
EMT is a concept that, in it's simplist form, states that whatever the current price of a company's stock happens to be, is exactly accurate 100% of the time. It believes that there is enough information out there for the masses to consume and use, and any movement in the stock price is therefor a direct reflection of that mass group information, and directly a reflection of the company's true value in the moment.
People who subscribe to this theory also believe that famous investors like Warren Buffett, Peter Lynch, Mohnish Pabrai, Joel Greenblatt, and really anybody who does exceptionally well is a statistical hiccup, and is based purely on luck.
Concept B - Inefficient Markets
Inefficient Markets are the oppositie of EMT. They have a belief that there are 2 parts to a companies stock: The PRICE, and the VALUE. People who believe the markets are inefficient, believe that the value of a company's stock is not always reflected in the price that you could buy it for on the open market.
What this inefficiency creates, is a situation where an investor could identify and calculate a "value" for a company's stock, and then see if there is a departure from that value amount in the company's stock price. If the price of the stock is below calculated value, then it is more favourable to buy the stock. If the lower price difference from the value is very large, then the "buy" becomes much stronger.
On the flipside, should the price be above the calculated value, the it would favour selling.
The main problem with(and reason to believe in) inefficient markets lies purely in the calculation of a fair value for the company in question. With millions of people each determining value, the methods are varied, as are the resultant values that the millions of people and investors come up with. This variation becomes much more pronounced as we venture into the realm of smaller cap companies, companies without reliable and predictibale earnings and expenses, and companies in confusing industries or situations.
Warren Buffett has stated that he believes that Efficient Market Theory is correct most of the time, but not all of the time, and further adds that investors that look to buy and sell when the market becomes inefficient and favourable to buy, and/or sell, stand to capitalize greatly, and consistently in the stock market. It is important to note that he also favours buying during these inefficiencies, and never selling, if at all possible.
Why is the stock down?
The stock is down because markets are inefficient. And if you ever find yourself thinking "This stock price is CRAZY LOW!!!! Why is it low right now???", then one of two things has happened....... You have either valued the company incorrectly and you are wrong, or you have valued the company correctly and you are right. If you are right, then you should buy ;)
Cheers!!!
Dividends wrote: People cashing out this am and I bet will regain later today...
rinse and repeat