(Un)Intelligent Investor Article, page-74

hi Islay. I've been trying to make sense out of all this discussion. I've been in GEM for about a year, not a childcare expert, far from it, but bought in because we have a national childcare crisis and GEM seemed to be doing a very good job addressing it. I haven't seen or heard anything yet that would cause me to change this view. Every metric in GEM's half yearly institutional presentation painted the picture of an outstanding business in my view.

From my observations though, GEM sp does seem to be highly volatile and reactive to any piece of news or opinion that can be remotely connected to them - Joe Blog takes an option over the corner block next to the pub in Cobar, says he's thinking of putting a childcare centre on it because Beryl's thinking of having a baby, the local paper reports it, and suddenly the wires run hot that GEM has a competitor so SELL and the share price drops 10%. Or there's volumes of forensic analysis about what the govt may or not do, or how retail is up, so less money for childcare, so SELL. It gets really tiring.

Yet out of it all, I can't see any change to the fundamental situation: we have a national childcare crisis and GEM seems to be doing a very good job addressing it.

All the muted changes - eg requiring more staff per child - are only going to make the crisis worse, the staff shortage worse, the cost of childcare higher - will the govt / regulators realistically decide to make the crisis much worse?

I, and probably many others on here, would really appreciate it if someone with good knowledge of the childcare sector could provide a succinct, informed, unemotional, unbiased explanation of what's driving the sp down. Is it more a case of the markets giving GEM a kick in the pants for poor capital management, or the short sellers having a field day, or has some fundamental industry thing actually changed to threaten the GEM model?

J