Sometimes it’s hard to argue that market capitalism has any chance of correctly allocating money to the companies that can use it best. Case in point: Stock-market performance this year has been driven by the raw share price, with lower-priced stocks doing better and higher-priced worse.
Forget a careful evaluation of future cash flow, valuation, brand power, management skill or even political sensitivity. I repeat: The best explanation for how stocks have moved so far this year is the price of the stock, an almost meaningless number. Stocks priced below $1 have performed the best, followed by those between $1 and $2, and so on up almost perfectly. The worst performers have share prices above $100. It looks remarkably like investors are treating a low-price share as an indicator that the stock is a bargain, and a higher price as a sign that it is worse value for money.
The share price on its own carries virtually no useful information: It depends entirely on how many shares the company has issued. A company canto create more at a lower price, without making any difference to the intrinsic worth of the company. Equally, it can consolidate its shares to reduce the number, increasing the share price but again without any effect on how much the company should be worth.
The fact that the stock price at the start of the year is a near-perfect determinant of how a stock has performed is depressing, but at least in part explainable.
Sir Buffet Warren is getting old!
Well that is true, but it has not much to do with free market capitalism. The government is printing money like crazy and giving it to people who don't consume as much, so they spend it on stocks,like in a casino.
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One
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Tell this to the shitcoin shills in Cryptoland
How are things with the capitol now?
Dollar General model of retail investment
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Spend more and eliminate all taxes. Let the money printers go fast. Democrats don’t need a debt ceiling. Lots of money for everyone. Republicans should be protecting paychecks against any taxes. No tax increases! Spend! $2000 for you, $5000 for you. Shoeshine boy says buy stocks!
Find subdue him. First of all, I don't trust cops. Secondly I'm NOT that stupid!
Cha-ching Butter-Bean!
With sports betting nonexistent due to Covid, people who never would otherwise be in the market are day trading low price stocks to get their gambling fix.
No...!I wonder why sally always says thank you young person.
Hmm but $BTC has been priced at several thousand per coin and beaten almost the entire market
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Robinhood
Good luck picking them!
The majority of investors probably have no clue about the relationship between share price, shares outstanding and market cap.
So long any penny stock?
while signs of optimism abound in the wider market. Add in prices driven up fast purely by the arbitrary measure of how many dollars they cost and there’s good reason to worry. Think ?
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