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The irrational component of your stock price
Market fundamentals explain share price fluctuations over the long term, but in the short term irrational investor biases and myopia can skew prices.These emotionally driven deviations in the markets can upset a company's strategic plans—if its managers don't understand what lies behind the deviations.The assumptions investors make about inflation and earnings projections are responsible for this skittishness.Moderate adaptations to a fundamental valuation model can help companies assess the impact of emotional investors.
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