I know BH will be oh so sensible, and say I am leaping to unwarranted conclusions from a baseless assumption, but--IMHO, there are people with money who want to keep this stock down, and what happened today is a good way to do just that. After all, a good deal of trading is just "psychology." Having the stock sell off after a great report is a great way to set the psychology as "bearish." Many people will doubt their own bullish thoughts in face of a declining stock price. And will doubt bearish thoughts in the face of rising prices.
Ok, Sam. Wouldn't want to disappoint you!
I understand the concept of issuing bearish reports in an effort to drive prices down in order to buy. And I understand the concept of selling or shorting a bunch of stock in order to cause a short-term technical breakdown which causes others to sell such that the stock can be bought back more cheaply relatively quickly. But I don't understand how using a lot of money to keep a stock down for a long time is supposed to work. If the concept is that they know the price is too low, what prevents some of the people in the know from buying at those low prices thereby causing the originators of the scheme to fail in their attempt to profit?
I'm not arguing here that the efficient market hypothesis is correct. I think that anyone who pays attention to the market can see that it is false. I am merely contending that it is hard to directly and deliberately distort prices for a long period via actual trades in a way that doesn't hand any resulting profit to others.
BTW, I absolutely agree with you about bearish psychology. We have seen several posters here say they are giving up or are tempted to. That tells me that this could one of those Buffet moments to be greedy when everyone else is being fearful. We could get a down-spike capitulation on Monday as the only-check-my-stocks-once-a-week types bail, but somehow I think it will take longer to find a bottom. When a stock drops towards the end of the year there is a tendency for tax loss selling to keep it down for a while.
Notice that none of the analysts have pointed out yet that the same factors that will limit SanDisk's cost reductions in Q4 (transition to 32nm completed and transition to 3X slowing) also mean a decline in bit growth per wafer. Presumably the majority of bit growth in Q4 will have to come from Fab 4 ramp, improved yields and non-captive supply. Not that it would be likely to help: they would probably spin it as meaning more non-captive supply and hence lower margins. |
