swimming against the tide, page-5

Mita,

The market is never wrong, as the saying goes.

The LIC analyst did mention that he had some reservations with the product. There were other reasons that I was unable to fully comprehend at the time but significant for me to cut my position.

Whether or not the indicative target of $1.50 is reached or not,is immaterial. I presume it was a ball park figure & from $4.77 to $1.86 has been a dramatic collapse in the share price.

Analysts who visit companies & get to sit down with the company executives & interview them, I believe, have a greater chance of getting it right, than investors who can only read reports & information the company wants them to hear.

Analysts, on the other hand, have a much better chance of telling if the information they are receiving from the company executive is a whole load of bull dust.

If the information proves to be untrue then the company's share price tends to suffer as not only does the LIC sell its existing holding (usually over 5% of the company's listed shares) but it could then borrow shares & sell them.
In other words short the stock.

Reasons stocks are shorted include poor & unreliable
management & their position in relation to competitors.
This could mean the market setting the price for the product rather than the company itself. Downward pressure on prices means shrinking margins leading to overheads becoming a higher percentage of sales & lower profits.