Media Updates, page-1810

I understood that most investors are feeling pushed by the recent squeeze in share price, but it pays to not loose a grip on fundamentals and not be affected by psychological biases.

I'm being optimistic about this recent unfortunate event brought on by the CEO even though I feel like a mud thrown at my shirt. I understand it takes time to heal and I'm hoping to see you all there soon. Today, let me share some new ways to look at things and some facts and hope it provides some relief.

One of the most challenging emotion, as portrayed by Behavioural Finance, in investing is "representativeness," which is simply an inherent ability to detect patterns and act on it. This is been shown to make poor market timing decisions and depleting returns. Futhermore, this emotion is further complicated by tax planning which again leads to amplified poor market timing.

"Random Walk Hypothesis" is a theory derived by Maurice in 1953 who found that share price moves in a random fashion like a random number thrown at it and regular price cycles couldn't be observed. This was again challenged by "Efficient Market Theory" but then again and later found that not all agree on an intrinsic value and mispricing occurs frequently, but with time it does narrow in semi-efficient markets.

I used to hold Capilano Honey and got out at $17, after I concluded that there isn't much capital left in the company to undertake more expansion and the company was just not going to capital raise and I didn't like them giving dividends. I made decent and above expected returns there. But then private equity comes in, says its mispriced, can do better and bids $20+. I'm left with tax bill for my decisions. Awesome!

With A2M, I'm going to sit back and watch with my both eyes on fundamentals and not jump to conclusions without confirming them.

Facts : (1)Infant formula market in China is expected to grow to ~30 Billion in AUD by 2020E, at CAGR 9% and two child policy will help. (2) A2M's infant formula in China can be stocked in 20,000 stores than just 9000 stores. I still prefer the online channel.