Curiously, most analysts say the market tend to discriminate and that the price contains all the information. I can be more or less agree that in the long term the market discriminates and that sooner or later recognize the value of companies traded in, but I'm short of saying that no, the price does not contain all the information. A few comments and questions may throw light on it.
How can understand that only last a couple of weeks most technical analysts claimed that it had to be in the market. " They are the defenders of the market (price) values \u200b\u200band expresses all the information.
How can we understand that most of the values \u200b\u200b(especially the big ones have reacted in much the same way?.
The truth is that most of these great values \u200b\u200bthat represent more than 50% of indicators have been left just a couple of weeks 10% of its value, or at least that's what they say their current prices, because I do not.
Go ahead I understand that technical analysis has its uses as well as other tools but we can not forget that humans if there is something we are known, is by mimicking what we see, if all we also buy and vice versa. Therefore, without disdain understand that can not be used as a unique tool to be in the markets, ie to invest.
I think the study of the fundamentals of a company (albeit complex) goes further and allows calm analysis of what is behind it and its ability to generate cash flows that the end of the day is what to an interested investor.
understand is why the market is irrational and does not discriminate, and it is precisely this lack of discrimination ability, which enables those who is able to analyze the information available to invest with a reasonable safety margin to obtain an adequate return. Return that we can not know whether to produce in 2 months or a couple of years, as the irrationality of the market means that many factors (mainly psychological) does not reflect the potential of the business.
In a brief way I mention, by way of example only companies that after discounting the downhills too many uncertainties right now and personally I do not see these, at least to the extent that the price shown.
can include all known companies such as Vivendi, FRANCE TELECOM, TOTAL FINA, DANONE, EON, EXXON, TELEFONICA, REPSOL. To cite only companies important capitalization, which at current prices if we consider its normal capacity to generate cash trading at very attractive multiples.
Finally, indicate that it is in these companies where they usually find more hidden value for the market, but the quote because I believe are the most best known. There are many other smaller companies that have fallen to attractive prices, you know I usually choose my analysis companies in various sectors and sizes, but usually in the mid-size and small is where I usually find most dysfunctional between price and value of the company.
I leave for both reflection to UDS, a set of questions as a summary:
Is it normal if the market discriminates most large-cap companies rise or fall as a flock of sheep at the same time?. Would it do so well so abruptly and in similar percentages?.
you own.
