I've steered clear of this forum for over a month to clear my head, regain clarity in my convictions and reassess the underlying premises supporting my original investment. Whilst Hotcopper can be a powerful tool, it can equally be an emotionally toxic environment for the 'trigger finger' investor, and one must take time away from it.
During this time, I refined my investment philosophy through reading some terrific books by both Graham and Fisher, who shed light on a truly fascinating notion that I thought I'd share and applies directly to Fluence:
Fisher outlines a fundamental disconnect between 'earnings-per-share' and 'price-to-earnings' ratio; the former is a representation of the fundamental, longer-term underlying progression of the company whilst the later is a temporal and transient representation of the financial community's appraisal of the stock at a given time. Indeed, however, these two financial metrics rarely run in parallel because the financial community's appraisal of a company is fickle and often inaccurate. What this means is that a slight price gyration can very quickly change the financial community's appraisal of a stock from a favourable to unfavourable image, and the inherent herd effect of the stock market magnifies any slight gyration in price. However, the irrationality of the market means that movements can be overstated both upwards and downwards, and in turn, potential 're-adjustments' manifest into overcorrections purging a stock into oversold territory.
Simply put; the current reality is that the financial community views Fluence in an unfavourable light due to an overly emotionally charged negative appraisal of the stock. The question then becomes: 'does a disconnect currently exist between the emotions of the financial community and how they presently view Fluence against the company's underlying fundamentals, or do they run in parallel?'
I think the answer is quite obvious.
I will leave you with a intriguing quote from Phillip Fisher:
"The wise investor will consistently makes abnormal returns when they learn to recognise the common deviation that arises between the financial community's appraisal of a given stock (price-to-earnings) and its underlying operations (earnings-per-share), and who trusts their own convictions enough to stay the course. This is what it means to be truly contrarian."
The time away, left to my own thoughts and analysis, has once again re-instilled a great deal of confidence in my Fluence investment. I will be loading up further in the coming weeks and months.
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