RE: 4D market cap now below £50m9 Mar 2022 18:58
Can I add my two cents?
It's always a good idea to be mindful of cognitive biases that skew our thinking and one that could apply here is the halo effect.
“halo effect, error in reasoning in which an impression formed from a single trait or characteristic is allowed to influence multiple judgments or ratings of unrelated factors." (Britannica)
i.e. sticking with the football analogy - in the same way that the scoreline of a football match or a teams end of season position in the table doesn’t necessarily give accurate insight as to how a team played or how a manager performed, the depressed SP or lack of new significant investors the last 12 months doesn’t necessarily give accurate insight into whether or not the work management did during the last 12 months was good or bad.
Here's an old article out of McKinsey which makes the point.
https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-halo-effect-and-other-managerial-delusions
“Many studies of company performance are undermined by a problem known as the halo effect. First identified by US psychologist Edward Thorndike in 1920, it describes the tendency to make specific inferences on the basis of a general impression.
How does the halo effect manifest itself in the business world? Imagine a company that is doing well, with rising sales, high profits, and a sharply increasing stock price. The tendency is to infer that the company has a sound strategy, a visionary leader, motivated employees, an excellent customer orientation, a vibrant culture, and so on. But when that same company suffers a decline—if sales fall and profits shrink—many people are quick to conclude that the company’s strategy went wrong, its people became complacent, it neglected its customers, its culture became stodgy, and more. In fact, these things may not have changed much, if at all. Rather, company performance, good or bad, creates an overall impression—a halo—that shapes how we perceive its strategy, leaders, employees, culture, and other elements.”
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