RE: RE: it's worse than I thought.14 Jul 2022 11:38
DanInvestor: wasa's pretty much summed it up but to answer a few of your questions:
- No markets aren't rational, as Allessio Rastani likes to say, the share price is a reflection of short term SENTIMENT, not fundamentals. You can compound this further with modern day algorithmic/technical trading and so on and so forth.
- Related to the above, the smaller the MCAP of the stock, and the lower the liquidity, the more prone something is to wild over/under valuations (this can be a good thing - it presents opportunities - it can also lead to frustrating periods when on the wildly undervalued side - it is what it is)
- Entry level is "important" but then everyone always wants to buy the bottom on every stock (obviously) however no serious investor would expect to buy the bottom every time (or even often really). There are endless strategies for trying to do so...but there is no right/foolproof way. Some might "scale-in" in chunks, some might wait for "technical" turns, some might judge it by weighing the fundamentals - the market - and a dash of price history, but none will ever be close to 100% reliable (despite some who love to claim they're Yoda of the markets). A couple of stocks I've held in the past year have been taken over (part of the reason I was in them) yet I managed to miss them by short-term trading out to buy back (woops). A cautionary tale perhaps, as haggling over a few pence is often the wrong thing to do, as you don't know when it'll turn (or even get take over).
- I think the worrying about PI importance thing is largely an irrelevance and essentially an inferiority complex from many. Smaller companies will inevitably court those with deep pockets who can provide the money to drive the business but this doesn't mean they don't want the share price (and therefore their PIs) to do well. People seem to feel it's mutually exclusive but most of the time it's not. There are countless rubbish AIM companies that will continually dilute frivolously and never do anything. This is quite clearly isn't one of them imo (and the rubbish ones don't tend to have the likes of Glencore on board - but instead bucketshops or spurious overseas backers you've never heard of). They secured an excellent comprehensive financing package and thusfar have been delivering well on the planned build (with some quite surprisingly good cost-saving capex purchases).
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