From its peak it is down 85%. While anything is possible in the future it looks like a meaningful, permanent impairment of capital for anyone who went heavy at the wrong time and did not sell.
The chart traces an arc that I've written about many times before where a great sounding story leads to massive price gains ahead of the fundamentals because "this is different," it goes on long enough to be convincing and eventually the mania/fad ends. The chart shows the recurring arc, it could just as easily be Comparator Systems (IDID) or Andrea Electronics (AND)--remember those?
This type of mania should be very familiar to long time readers and I think they are easily spotted as was the case a little over two years ago in a post titled Fad, Mania or Bubble that I wrote about... you guessed it; Molycorp. These will come up again and I will try to point them out.
Some people will trade fads and manias successfully of course but others will get blown up by them.
8 comments:
Here's an additional image to go with Roger's posting: http://rp-pieces.com/post/38381695513/back-to-rare-earth
thank you Tom
Roger,
your post today is most important, because this game is not easy especially when you get CNBC commentators hype the stock and even in this site there were few comments(not yours) that were interested in mcp. At the stock peak the sector - Miners were also selling at the top. But look what happen at Rimm, Fro. I have stopped whatching CNBC for about a year. I remember that I was trading MS - purchased around high teens and unloaded at 26. It went into 30's and wanted to short. Well, CNBC commentator come on and sayed that this stock is a buy. Well I did not short the stock but it went back into low teens. I have just picked up a great book from 1916 on the psycholodgy of stock market, great book. What one relizes is that nothing has changed on wall street. Pump up the stock, have the public get involved in buying it, then dump. These are stock syndicates, stock operators that have control of the news that are very powerful. If one does not understand the mechanics how things work then one should start reading how things really work at wall street and it is not like going to the a very sencere industry or your trusted priest, but it is made up wolfs, thiefs, so beware and learn the game well. Perhaps this is == sorry, if I offend some people == one of the few sites and Roger being sencere and trustworthy.
Jeff from NYC
Jeff,
This is a complicated issue. When an analyst is too wrong they lose credibility and eventually their jobs.
In the case of MCP, as Tom's post pointed out, there were multiple secondary offerings and those need to be sold so the potential for conflict is greater.
No answers for now but you are correct about needing to be aware of this.
Based upon the ratings book,all those watching CNBC could fit neatly into one Super Wal-Mart.
Those watching MSNBC could fit int a large asylum - and feel right at home. Fox News would be required on all monitors to keep them stirred up.
Off topic, but House Speaker Boehner's Plan B just crashed. Obviously, the House is in disarray and may not be able to pass any fiscal cliff bill. Going over the cliff now looks more likely; let the finger pointing begin. I see buying opportunities for the brave of heart.
Or, and here is a novel thought. Perhaps the President could show some leadership and concern for the country, and compromise.
Deciding the fate of the country in a week or two is just ridiculous
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