todays problem, page-9

In part, this can be put down to 'anchoring' and a number of other behavioural finance phenomena. Details can be found on Wikipedia or other sources.

Investors are anchored around the residual memory that CNP used to be a $10 stock and CER a $2-3 stock. Thus the memory holds that CNP should be higher than CER. There have been periods where this has indeed reversed, but over time we revert to the old, anchored memory.

People also remember the fact that historically when Centro moves, CNP moves more rapidly and higher than CER. Originally this made fundamental sense but over time the reason for this happening has diminished, however the behaviour continues and thus the memory of it remains. After a 9:1 dilution, the reason has all but evaporated, but the anchoring continues and will do so for some time.

This is why, in my opinion, a revived CER board, independence from CER and name change to something non-Centro is so important. It goes a long way to correcting the anchoring bias.

You might also want to look at 'confirmation bias' and the 'availability heuristic' all of which are part of behavioural finance and can go a long way to explaining what we are seeing. Look at some of the herding behaviours while you are in there.

All this behaviour takes time to unwind - people don't get information all at once, they are influenced by others, what they read and what they see.

If you get a chance, watch some of the Columbia University lectures in the 'Schloss Archives" (Google it), especially the 2006 presentation by Lewis Sanders.