1. When the stock looks like a falling knife, people just fall for it. No pun intended
2. People don’t focus on long term growth or valuation discrepancy. Just that “it looks like there is no support and I can buy it cheaper tomorrow”
3. NAN 1400m market cap vs OSP under 10m market cap. People forget the smaller you are, the more scope for growth. This eternal rule will never change. The next Facebook substitute will always experience more exponential growth than the current Facebook. Understatement of the year. Just because other medical stocks drop 10% today, doesn’t mean your stock should drop 10% too simply because you are 99.7% down and other stocks are 500x up and people have made a fortune.
4. OSP is a perfect example why you should diversify. But this can backfire on you too if you don’t buy sufficiently at the bottom. Even if it means you might lose 1x. If business picks up, 100x from now is only 800m market cap. You can lose 1x buying any stock on the ASX.
5. Even if you buy what looks like a good business today. Something can change tomorrow. I view any business having equal risk in the long run. More mature businesses also have a saturation problem to deal with. The bigger you are, the more challenging it is to grow. But OSP is an established medical business with good margins. How dumb does GE look supporting a company with valuation 8m market cap…
