infinis prediction10 Dec 2013 09:59
Today 00:50
richard12345
RE: infinis prediction
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returning to my prediction on the infinis IPO, if you view in thread mode you can look at the original post. my prediction was the price would fall on conditional trading and they would cancel the IPO, and that it would only interest me if it fell by a factor of 4! the prediction was on 14th nov, the IPO on 15th. in fact the price didnt fall on the conditional trading, it seems because of the stabilisation fund. but it looks now that my conclusion was right, the IPO was 260p. with the IPO, days 1,2,3 the price ascended to about 272, days 4,5,6 it descended back to 260. days 7 to 13 it descended a bit and returned to 260, day 14 sharp descend to 251, days 15 to 16 descent to 248, and today the 17th day, descent to 240, so it has now descended about 7.7% which may not sound much, but savings today give you 1.5% in an entire year. so that is 5 years savings lost in 17 trading days. this isnt as dramatic as I predicted, but that is because the stock exchange and also the stabilisation fund are designed to prevent rapid ascension or descension. my prediction was just based on the fundamentals in the IPO prospectus. it shows the power of fundamental analysis. which is good for buy/sell/hold/ignore decisions, but less accurate for specific numerics. with IPO applications they actually tell you to read the prospectus before investing, but its a major effort to study the prospectus, and you dont have much time to. I like what the company is, and at a much lower price I may well buy in, because it could become very lucrative. but they have expanded too fast, and they need to slow down considerably. From going through endless loan applications by smaller firms, I know that the best firms expand very gradually. eg they will expand by just recruiting one person. borrowing allows a company to expand faster, but too much borrowing means that the company doesnt generate much profit. whats the point of being big if you dont make money? infinis is a company who have borrowed too much money to expand too quickly. GREED. ultimately expansion needs to be very carefully budgeted and audited. the extreme debt of the government is because of a total lack of budgeting in the past. the previous tories began the problem by converting surpluses into tax cuts, but in fact tax cuts need to be audited very carefully because the economy is cyclic. surpluses are cyclic. so if you cut taxes to the max, public services become unsustainable when the cycle moves to a deficit. wisest thing is to cut taxes very gradually, eg by 1%, and to increase taxes gradually instead of borrowing if public services become unsustainable. or have tax holidays in sunny weather. the taxpayer is better off if you increase taxes rather than borrowing, because the borrowing eventually has to come from cuts to services or tax rises. they all opt for cuts to services
quoted richard12345