No one can ever answer that question except by guessing. Some guesses will be better educated than others. The fact is the closing price of RAC - like all companies goes up and it goes down. The changes are driven by fundamentals and. by human behaviour. The market is made up of individuals who all buy and sell different shares at different times for reasons best known to them. Some of them make rational decisions, some make irrational decisions. Some decisions are based on logic, some on maths, some on insider information. Some buy/sell and/or hold with religious fervour. Institutions and funds buy and sell to maintain parity with an index.
So why did RAC go from $1.70 to $2.78. Remember, before it was $1.70 it was well over $2. The price never goes in a straight line. No one can ever pick the exact top or the exact bottom. Some on this forum are quite good at picking close to the top and bottom using technical analysis - but no one can ever get that right all the time. If you could you'd have the equivalent of perpetual motion machine for investing - and as we all know they don't exist. The answer is the price rises and falls based on the mob behaviour of hundreds of individuals make rational/irrational/emotional decisions about whether or not to buy RAC.
For my money, consider the graph for the last 12 months. If you take a longer term view the daily price fluctuations are nothing but noise and the trend is your friend. If you've done your reading (and
@wombat777 is a great place to start) and made your decision to buy and hold for the take over then watch the trend and ignore the noise.
I guarantee you the price will go up, and it will go down. Yesterday was a great example of bizarre behaviour (in my view anyway). But my rationale for buying and holding RAC is not dependent on the noise - but dependant on the fundamental ability of (a) the drug to show overwhelming efficacy and (b) management to execute a successful transaction.
That is the medium term equation here. Obviously I'm satisfied the risk/reward metric is stacked toward success. My advice, enjoy the ride but keep your eye on the finish line (or the dotted trend line).
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