Comments on: The stock exchange is stupid

By: Adam

Adam — Mon, 03 Nov 2008 21:50:34 +0000

What on earth made you think that the share price of any company was “supposed to reflect their ability to earn profit with an element for risk factored in”? That’s never been the case, and never will be; to think otherwise is to invent some random personal conception of what a stock market is, and stick to it in the face of, well, all the facts and history to the contrary.

What on earth makes you think that the plunge in shareprices has anything to do with people thinking the companies aren’t “worth” the shareprices they were at? Have you heard of short-selling? Do you know what happens if you short-sell enough stock at once, and offer it at a discount? Have you heard of de-investing, moving money from stocks back into cash, with the intent to wait for an inevitable share price fall and reinvest later – and do you know what happens when enough people do this at once, too?

Not to mention that EA (to pick just one) is seeing substantial increases in quarterly losses right now (the shock redundancies aren’t so much of a shcok if you look at the quarterly P&L for the company for the last couple of years), and, you know, it might be quite reasonable indeed to be afraid of something like that and to sell out while the price is still relatively high.

This post is just a gross over-simplification that ignores plenty of rational and highly probable explanations in favour of cherrypicking a few biased ideas that prop up a specious argument.

By: Arun

Arun — Wed, 15 Oct 2008 21:38:52 +0000

I can see where you are coming from, but the markets are stupid in the short term, but long term there is some logic.

To counter your points, I looked at the financial statements briefly, and EA posted $0.5 mil losses last year. Hasn’t been that great in the past years as well. The point is, for the price there are other companies out there giving better prices.

Another point, in a recession (as all experts seem to think we are in one now) who in their right mind wants to spend £30 on a game, apart from those that are die hard fans. And sadly, there aren’t that many to keep an industry going. Also, any game is availbe on e-bay after a few days for half the price.

Investment is done with the head, not on passion (atleast for those who want to make invest for the long term)

My two cents worth

I love gaming too!!

By: Coyote

Coyote — Wed, 01 Oct 2008 17:04:09 +0000

Recently, I’ve begun trying to leverage my mad gaming skillz to succeed at investing. Believe it or not, in spite of the collapse in the credit market, I’ve been doing pretty well.

The thing is – you nailed it. The stock market can be highly irrational, especially during downturns. But smart investors look at it as the price of shares (and houses, and other opportunities) going on sale – for a limited time only. The real trick is timing your entry. Well, and exit, but that’s another story.

By: Stone Bytes

Stone Bytes — Wed, 01 Oct 2008 15:13:03 +0000

In panic, people don’t think rationally, right?
That’s shareholding stupidity. It also possibly mirrors the relative ignorance that remains to be brought down about video games after all and new forms of entertainment.
The good news is that now could not be a better time for investment in the video gaming industry.
A pity I don’t have a couple of spare millions there, that’s where I’d put my money.

On a final note, why “consumer stupidity” really? I’d rather say lured victims.
Or is the gripe against the overall over-consuming habits present in the US and UK?