Ruby Fever

Given the massive week we have had I thought I should post a perspective on MUS from someone who has been here for a while. All of this is my own opinion and is of course not investment advise.

MUS is a company that brings out strong emotions in people - I am not sure why, but the mood can switch very quickly from love to hate and back again with this reflected in the share price. At the moment we are in a star-stuck love stage with many new people suddenly catching ruby fever.

Normally love and rational decision making tend to not mix and it is very risky buying into a stock that has had such a rapid run up, but I think in the case of MUS the risk is a little less than normal for this situation.

1. Ruby fever has only just started. The way MUS traded this week with massive new demand and a complete collapse on the sellers side strongly suggests the next two weeks will see further rises. The momentum that the last week has unleashed is going to be very hard to stop pre-auction. If you are a trader then MUS is worth investigating purely as a momentum play.

2. Mustang as a business is only getting started. If you are a investor then you want to put your money into companies that are going to grow over the long term. Mustang has fantastic long term prospects (which have been discussed in great depth in many threads here), such that any short term overshoot in the SP will be meaningless in a year or two. This means if you are investing for the long term you don’t need to worry as much about overpaying.

3. The auction may surprise on the high side. For those sitting on the sideline thinking to buy in after the auction when the outcome is known may find that the SP doesn’t fallback (i.e. the old buy the dream, sell the news). We may well see a massive run up pre-auction that just keeps going post-auction.

MUS is a high risk company, but with this risk comes the very real possibility of massive gains. Nobody should invest more than they can afford to lose (MUS is a speculative play), but in all the time I have been here I have never seen things align in both sentiment and fundamentals like I have seen this week. If you are going to catch ruby fever now is not a bad time catch it.