A
Andy
21 Nov 2013 14:24
Link
An error is fixed that has hampered trading and valuations on the share market.
The problem originated in the assumption that investment funds will sell their holdings when holding such shares does not make sense any more.
This is the case when the P/E ratio is too high and they are also expected to take their profits when the share value is increased substantially compared to the price paid.
These assumptions always worked in most cases, but as we have seen before, they do not work when people are trying to misuse them to make a profit.
The market workings can be manipulated and players were able to make sure certain investment funds do not sell.
We have seen this before on a small scale but unfortunately, it is now taking place on a large scale and we had to intervene and improve the share trading in general.
Share values will not increase when it is obvious that investment funds should have sold their shares and did not. The share price will then remain unchanged.
Corporations that reached absurd values are repaired and values will return to normal.
Share values that reach a far too high value and are not sold while someone is trying to purchase and it is obvious that nothing will be offered, will be reduced in price to a level consistent with a reasonable P/E ratio.
It does not make sense to have corporations making a loss and have a value of 4T.
It also does not make sense to have corporations with a P/E ratio of 100+ and a very high market value.
At P/E ratio >100, you would expect the value to start declining, until it reaches a P/E value of 50 or even less.
The change is installed today and corporation values will be gradually corrected.
The problem originated in the assumption that investment funds will sell their holdings when holding such shares does not make sense any more.
This is the case when the P/E ratio is too high and they are also expected to take their profits when the share value is increased substantially compared to the price paid.
These assumptions always worked in most cases, but as we have seen before, they do not work when people are trying to misuse them to make a profit.
The market workings can be manipulated and players were able to make sure certain investment funds do not sell.
We have seen this before on a small scale but unfortunately, it is now taking place on a large scale and we had to intervene and improve the share trading in general.
Share values will not increase when it is obvious that investment funds should have sold their shares and did not. The share price will then remain unchanged.
Corporations that reached absurd values are repaired and values will return to normal.
Share values that reach a far too high value and are not sold while someone is trying to purchase and it is obvious that nothing will be offered, will be reduced in price to a level consistent with a reasonable P/E ratio.
It does not make sense to have corporations making a loss and have a value of 4T.
It also does not make sense to have corporations with a P/E ratio of 100+ and a very high market value.
At P/E ratio >100, you would expect the value to start declining, until it reaches a P/E value of 50 or even less.
The change is installed today and corporation values will be gradually corrected.