bigger picture vs fundamentals

I think a lot of people have missed the bigger picture.

There's been a lot of posts on the high grade vs low grade threads. A lot of posters are referring to the share price tanking on Thursday and are associating this with the company's announcements which also occurred on Thursday.

Well what was the bigger picture? All around the share market and not just on the ASX, there was global share market panic!

Read the newspaper headlines in Australia, UK, US. Major fear and panic!

Reporters should be held partially accountable for the global mess, when I get into an elevator the buttons are for up and down, not up and plunge! Bad news sells though.

People in their flight to safety have been jettisoning anything of value, especially anything that is perceived to be speculative.

From the market's perspective, KMC hasn't quite yet gotten itself out of the specy neighbourhood yet. But it has runs on the board, and has only just started batting.

Economics 101 talks about supply and demand, this brings about an equilibrium in price. In the context of the broader market instability, I'm not surprised that there was a drop in share price.

There are a lot investors out there who believe in the adage to sell on good news. Now... what would happen if there are a lot of sellers, and in the context of the broader market tanking, there are fewer buyers? Supply exceeds demand, equilibrium equates to a decrease in price.

Add to that a late afternoon announcement, whilst Rome was burning. How many people are seriously going to read and digest the first of the 2 company announcements?

The appendix, was bloody long and strategically the company should have released it as an aftermarket announcement to allow people to digest it. However, in short succession they released another announcement - on potential debt funding. Geesh... it almost seems as though they were trying to bury the good news - no further dilution!

Back to the fundamentals though, if they are going to raise money - not through equity, then to get $35mil, whoever is going to lend it to them is going to be doing a lot of due diligence. In the current market, unless the fundamentals stack up they won't get a red cent.

Hmm... but then again as they are looking to borrow from the US market and the GFC mk1 demonstrates that the American lenders do seem to have more dollars than sense...

;-)

To clarify my position, yes I own options, in the current market I paid too much for them, but I've got plenty of time for them to come good. Furthermore, I'm not aware of any margin lenders lending on these options, so I'm not worried about forced margin sales coming through.

This is not to be taken as advice, thats what you pay stock brokers and accountants for.