...countless times I have seen HC forum market participants of darling resource stocks continuing to express optimism and pride in their long held stock despite many of them being down like 50-75% from their peaks.
...more often than not, they conflate their 'good stock' with a need or necessity for their stock to reflect a better price (than what it is currently trading at). A good stock is in the eye of the beholder, if it has done good for them in the past (like multibags), they are more inclined to hold dearly to them. But their judgment could also reflect rear mirror view perspective.
...a good stock tends to be bought up to very elevated levels of valuation reflecting forward growth outlook. But when the macro landscape has turned for the worse for the stock, those lofty valuations can no longer sustain as growth outlook is slashed, and hence the stock price must drop. And holders cannot understand why it could decline by some 50-70% from the peak. They continued with rear mirror thinking. The brutal decline reflects the market has largely discounted those earlier imputed growth and may even see protracted headwinds for the sector the stock is in; market participants never minded the multi-bags that the stock went to when it was either based on a future promise or traded at PE of some 30-40x but express bewilderment at why the stock could retrace back almost all the gains entirely. The simple answer is that what drove the stock up to those lofty heights can no longer be delivered, so it had to come down to earth. A protracted decline in the sector could also increase the chance of the company have to do a discount capital raise which will result in further deterioration in the stock price. Troubles get compounded very quickly and when market sniffs it, the big boys dump their stock quickly with no procrastination.
...hence what drives the stock price is EXPECTATIONS. It cuts both ways. For an average investor, we do not have a clue what is truly imputed into the stock price. For many small caps, they are mostly announced stories/promises but when they are revealed that there are hurdles to them or not progressing well, don't expect management to come out blazing telling you in no uncertain terms that they didn't find any minerals or their collaboration is unsuccessful, they will spin it positively and sometimes you can only understand the real truth after a savage beating on the stock price. Even then, I see many still staying the course, rather not take a small or reasonable loss on a failed bet believing that a paper loss will stay a paper loss, no it is usually the beginning of the decay and the stock price could lose >50% of its value.
