AZL General Discussion, page-18583

Good points.

The reason I try to stay away from market cap comparisons is I find it is not only difficult but quite impossible to determine what should be the market cap. There are a number of reasons as many things are based on potential, likelyhood, probabilities etc.

If we take LTR into picture, it was sitting on $1.25. An offer came, in couple of days it was $2.50. Why were people not able to think before that market cap should be based on $2.50 and loaded up to the neck? Billions were dollars were gained in market cap in a day. Few days back LTR was sitting around $3.00. In one day it moved closer towards $1.50. Billions and billions of dollars wiped out in market cap. Why were people not able to see that market cap was high? Or was it? What should be the true market cap? So we see fundamentals did not change in a day but market caps changed dramatically. So I try to not put much into market caps and concentrate on price action. Fundamentals and market caps are important, but very difficult to quantify.

People try different methods. Eg comparing to other stocks. But what if other stocks market caps are also not true representative? Then there are nearology players. One stock I was playing for last several weeks, they will say - "That stock market is 1 billion, we got similar stock, similar area, our market cap is 5% or 10% of that". I read exactly these type of things today even today. It leads to hype, suddenly some stocks jump 100 to 300% or even more. Then at some stage reality is faced and they come back to their home. But while the hype is there, those comparisons are widely used and it leads to big volatility and gains. The stats around this not good. In last 1 year I have seen around 70 to 80 stocks which went through this phase, which I call Stage 1 - based on hype/potential. Big gains are made and I also play this phase. Then slowly they have to drill and face reality - Stage 2. And they all come back - 80 to 90% and come back even below previous prices. So important to know when to fold. Except for AZS/WC8 all others till now have failed - all of them. But they moved up to 300% or more in Stage 1.

So I get your point. In the absence of any other strong data, it provides a good guidance. But I feel its not very reliable - Just my thought, I could be wrong. All the best.