Running Commentary on the SP Movements., page-13136

I had a thought this morning about these cycles that AVZ goes through where the price seems to "stagnate" a bit between leaps upwards.

Let's say you had two ASX stocks, both with a current market cap of 500 million:

• One of those two stocks has risen at 5% p.a. pretty consistently for the last five years.
• The other had until recently had a market cap of just 50 million, then had a rapid rise to its current 500 million.
• Both these stocks have the promise of very good news on the horizon and estimates place both stocks as having a potential market cap of 2+ billion in the next 12 months.

Now ... how do you think the trading patterns might differ between these two stocks?

Obviously the rapid rising stock here is analogous to AVZ. My thinking is that, because of the rapid rise, there will be a reasonably high volume of holders who are nervous to lock in their gains, putting a lot more pressure on the sell side of that stock. But with the other stock, because it has performed consistently, but not that great, few will be wanting to sell pocketing a marginal gain when there is the possibility of a huge gain around the corner. On the buy side, I'm also thinking there'd be more interest in the slow & steady stock because, looking at charts, psychology tends to have people think, "oh that other stock has already had its boom."

To me, this element of human psychology could explain what we see with these cycles in AVZ SP, without capping necessarily being a factor.

Any thoughts from more seasoned investors? (I'm a psychologist, btw, hence the thinking in terms of behavioural patterns.)