It's All About Perceptions, Not the P/E

The one thing I've ended several of my last few posts with is this, “It's not the news, but how the market reacts to the news”. That's why MER can come out and sell their CDO's at fire-sale $.22 on the dollar which effectively sets the ceiling for everyone else, which effectively kills anyone's earnings who may have had them priced at anything higher than $.22 on the dollar, as did MER last quarter. And the market loved it, rallied the stock, even in the face of “we also are going to put out a dilutive secondary offering to raise capital, but not to fund new ventures or grow the business, no just to patch and plug holes to keep the ship afloat” and still, the market loved it! A couple of weeks ago even the rumor of MER “maybe offering a secondary” would have been enough to crash the market. So you see, it's all about perception, always has been, always will be. That's the one thing that fundamental analysts don't understand because if they did, they'd put down their spreadsheets and learn to read a chart.