Indeed if the GFC had taught us anything, it would be that the whole basket of equities falls in unison regardless of underlying value. We had Leighton trading at $16.85 at one point but their underlying Net Asset Value was $32.00. Individuals who understood this concept knew when to buy and had the courage and conviction to make those purchases at the correct price points.
Rick's implication is that if one has no idea about the underlying value of a company, the price information will actually be useless. And as such, in periods of volatility, one will panic and move with the herd to sell based on emotion.
On the other hand, investors who have an idea of the underlying value of the firm; these savvy investors will be buying when the share price hits their price points; as they would see the firm as undervalued significantly.
One can only have the courage to do this when one is able to calculate and understand the underlying value of the firm.
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OVR Price at posting:
27.0¢ Sentiment: LT Buy Disclosure: Held
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