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MD-Tech
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Ok, this is a mistake that a lot of investors make day to day and is so easy to avoid. Prices aren't governed by performance but by expected performance. Look at analyst estimates for the fundamental values. In general matching those expectations is priced into the stock price so an organic growth of 400% might be expected but only 40% materialised that is a massive decrease so expect a commensurate fall in the stock price.

The stock price change after an announcement is related to the degree of "shock" or difference between the expectation and the reality NOT the actual announced value. Otherwise you had already traded on the expected value of the metric because you expected it!

The value of a trading company is mostly the net present value of its future cashflows. Since future cashflows can't be measured accurately they are measured by applying the expectation of growth to the current value as an estimate. These are subject to compound growth so a small change in the growth rate today effects long future expected cashflows exponentially. Since this is already included in the current price if the expectation of growth changes then the price will change in the long run.

Organic growth is especially important because it is growth you can rely on year after year whereas you can't guarantee that you'll be able to find another company to take over every year. Even if you can find a company to buy every year there's no guarantee that it will be a positive effect on the bottom line. Because of this organic growth is the most certain and recurring of the growth types. It is also the core activity of most businesses. Not many businesses are dedicated to buying other companies, most produce something. Revenue growth form that something that they produce is their organic growth.

Ok, this is a mistake that a lot of investors make day to day and is so easy to avoid. Prices aren't governed by performance but by expected performance. Look at analyst estimates for the fundamental values. In general matching those expectations is priced into the stock price so an organic growth of 400% might be expected but only 40% materialised that is a massive decrease so expect a commensurate fall in the stock price.

The stock price change after an announcement is related to the degree of "shock" or difference between the expectation and the reality NOT the actual announced value. Otherwise you had already traded on the expected value of the metric because you expected it!

The value of a trading company is mostly the net present value of its future cashflows. Since future cashflows can't be measured accurately they are measured by applying the expectation of growth to the current value as an estimate. These are subject to compound growth so a small change in the growth rate today effects long future expected cashflows exponentially. Since this is already included in the current price if the expectation of growth changes then the price will change in the long run.

Ok, this is a mistake that a lot of investors make day to day and is so easy to avoid. Prices aren't governed by performance but by expected performance. Look at analyst estimates for the fundamental values. In general matching those expectations is priced into the stock price so an organic growth of 400% might be expected but only 40% materialised that is a massive decrease so expect a commensurate fall in the stock price.

The stock price change after an announcement is related to the degree of "shock" or difference between the expectation and the reality NOT the actual announced value. Otherwise you had already traded on the expected value of the metric because you expected it!

The value of a trading company is mostly the net present value of its future cashflows. Since future cashflows can't be measured accurately they are measured by applying the expectation of growth to the current value as an estimate. These are subject to compound growth so a small change in the growth rate today effects long future expected cashflows exponentially. Since this is already included in the current price if the expectation of growth changes then the price will change in the long run.

Organic growth is especially important because it is growth you can rely on year after year whereas you can't guarantee that you'll be able to find another company to take over every year. Even if you can find a company to buy every year there's no guarantee that it will be a positive effect on the bottom line. Because of this organic growth is the most certain and recurring of the growth types. It is also the core activity of most businesses. Not many businesses are dedicated to buying other companies, most produce something. Revenue growth form that something that they produce is their organic growth.

added 505 characters in body
Source Link
MD-Tech
  • 9.1k
  • 2
  • 34
  • 42

Ok, this is a mistake that a lot of investors make day to day and is so easy to avoid. Prices aren't governed by performance but by expected performance. Look at analyst estimates for the fundamental values. In general matching those expectations is priced into the stock price so an organic growth of 400% might be expected but only 40% materialised that is a massive decrease so expect a commensurate fall in the stock price.

The stock price change after an announcement is related to the degree of "shock" or difference between the expectation and the reality NOT the actual announced value. Otherwise you had already traded on the expected value of the metric because you expected it!

The value of a trading company is mostly the net present value of its future cashflows. Since future cashflows can't be measured accurately they are measured by applying the expectation of growth to the current value as an estimate. These are subject to compound growth so a small change in the growth rate today effects long future expected cashflows exponentially. Since this is already included in the current price if the expectation of growth changes then the price will change in the long run.

Ok, this is a mistake that a lot of investors make day to day and is so easy to avoid. Prices aren't governed by performance but by expected performance. Look at analyst estimates for the fundamental values. In general matching those expectations is priced into the stock price so an organic growth of 400% might be expected but only 40% materialised that is a massive decrease so expect a commensurate fall in the stock price.

The stock price change after an announcement is related to the degree of "shock" or difference between the expectation and the reality NOT the actual announced value. Otherwise you had already traded on the expected value of the metric because you expected it!

Ok, this is a mistake that a lot of investors make day to day and is so easy to avoid. Prices aren't governed by performance but by expected performance. Look at analyst estimates for the fundamental values. In general matching those expectations is priced into the stock price so an organic growth of 400% might be expected but only 40% materialised that is a massive decrease so expect a commensurate fall in the stock price.

The stock price change after an announcement is related to the degree of "shock" or difference between the expectation and the reality NOT the actual announced value. Otherwise you had already traded on the expected value of the metric because you expected it!

The value of a trading company is mostly the net present value of its future cashflows. Since future cashflows can't be measured accurately they are measured by applying the expectation of growth to the current value as an estimate. These are subject to compound growth so a small change in the growth rate today effects long future expected cashflows exponentially. Since this is already included in the current price if the expectation of growth changes then the price will change in the long run.

Source Link
MD-Tech
  • 9.1k
  • 2
  • 34
  • 42

Ok, this is a mistake that a lot of investors make day to day and is so easy to avoid. Prices aren't governed by performance but by expected performance. Look at analyst estimates for the fundamental values. In general matching those expectations is priced into the stock price so an organic growth of 400% might be expected but only 40% materialised that is a massive decrease so expect a commensurate fall in the stock price.

The stock price change after an announcement is related to the degree of "shock" or difference between the expectation and the reality NOT the actual announced value. Otherwise you had already traded on the expected value of the metric because you expected it!