Saturday, July 25, 2009

Still puzzled over the non role of history?

This from the NZ Herald this morning….  journalists still don’t get it:

“It's difficult to fathom how a company can report a 66 per cent decline in profit but still see a 12 per cent leap in its share price. But that's just what American heavy equipment maker Caterpillar found this week as investors responded positively to a result better than they had feared and a forecast…”

Investors are of course looking at the present value of expected future earnings. Possibly, just possibly history confirmed the way those expectations were formed…. but that’s all.

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