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Hogwash. Pretty much every company on the S&P 500 dropped 30% around March. Did their perceived long-term value change 30%? Double hogwash. That pricing reflec
by goatinaboat 6y ago
Hogwash. Pretty much every company on the S&P 500 dropped 30% around March. Did their perceived long-term value change 30%?
Double hogwash. That pricing reflected that people suddenly needed cash right now and was irrespective of what anyone thought about long term value. I will bet most of the sellers bitterly regretted it but saw no option but to sell at whatever price they could get because they had urgent immediate needs.
- _dps 6y agoYes, one good way to think about this was that there was very little change in the value (fully discounted long term etc.) of stocks but a large change in the price (current exchange rate with other participants facing temporal constraints) of cash.
- prewett 6y agoRight, that's my point: prices don't perfectly reflect long-term value. You give an excellent example of why the currently price might not reflect long-term value, which I need to remember for next time!