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So the other day some company said Research In Motion's stock is undervalued and should be closer to $93 (from $63) and the stock is taking off big time. A few days earlier Manulife Financial also got upgraded (from another company) saying the stock should be $24+ (up from 18.50) but Manulife's stock has gone down since then. what gives?
 

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I realize they are in two different industries and so far the past few days a lot of financial institutions value have dropped a few %, but even before this happened MFC has been dropping after it got upgraded while RIM has shot up right away.
 

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:rolleyes: I am a novice as I have stated in my first thread on this forum. Are you telling me you have all the answers and ask no questions at all?
 

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Red - you are welcome to ask any questions you want. Other forum members are just as free to ignore them if they don't like it.

To answer your question - this example shows how hard it is to predict the short term movements of stock prices. Some (including myself) might say it is impossible.
 

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Also keep in mind no matter what someone says a stock is worth if the markets go down or get hammered so will your stock in most cases.
 

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So the other day some company said Research In Motion's stock is undervalued and should be closer to $93 (from $63) and the stock is taking off big time. A few days earlier Manulife Financial also got upgraded (from another company) saying the stock should be $24+ (up from 18.50) but Manulife's stock has gone down since then. what gives?
You're going to find that all these experts are giving is their best guess and sometimes even their best wish. It is extremely common to find one expert forecasting an increasing price and another forecasting a decreasing price. (In fact, I've heard polar opposite analysis for both of these stocks.) One of the books I read (I can't remember the name) encouraged investors to have the confidence to start making their own prognosis. Firstly, you might ask questions like: Does the company have a good product? Does it have an edge over the competition? Is the product a necessity item or a luxury item? - if so how might the near-term economy effect the cash-flow? How might the long-term economy effect the cash-flow?

Secondly, you would then want to analyze things like the amount of debt compared to equity (D/E), and other ratios such as P/E, P/B, P/CF, etc. Then you would probably want to compare these companies to competing companies (Eg. perhaps compare Manulife to Sunlife and RIM to Apple).

So, basically it comes down to education. Lots of good books in the library on this stuff. I usually only use experts as a source of investments that I may potentially like to research, never as a outright "buy" recommendation. If it were just as easy as listening to experts an then buying, we'd all be rich. ;)
 

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I realize they are in two different industries and so far the past few days a lot of financial institutions value have dropped a few %, but even before this happened MFC has been dropping after it got upgraded while RIM has shot up right away.
If you start making buy/sell decisions based on what you see on TV, you will be chasing your tail all the time.
You will make your broker (or brokerage) very rich and yourself not so.
 

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:rolleyes: I am a novice as I have stated in my first thread on this forum. Are you telling me you have all the answers and ask no questions at all?
IMO, there is no such thing as a wrong question. Asking questions is a very smart thing to do.

To your question, it is very hard to say why stock prices go up or down over the short-term. Yes, some analysts may be able to move the stock price temporarily but this usually dies down within a few days. Despite what you may hear, stock picking is a difficult game to excel in. I tried it for a few years and though my results weren't bad, I've decided that there is a much simpler way to invest.
 

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what gives?
Well, consider it like an engineering problem where you're trying to predict the future outcome of an experiment where:

- you don't (and will never) have all of the information,

- the outcome itself can be affected significantly by any one of an innumerable number of insignificant perturbations,

- and the experiment itself is largely (though not always) modeling people's emotions.

Precise measurement in this scenario just isn't possible (if it were, we'd all be rich). So approaches to predicting stock values attempt to generalize trends based on individuals' perceptions of "value". What "value" means to one person may differ significantly from another. For instance, I ascribe a great deal of import to fundamental metrics (share price versus book value, and so on), and very little relevance to "emotional" metrics; thus, my view of what may constitute an under-priced stock could easily differ from someone else.

A great starter book on this subject is "The Intelligent Investor" (2nd ed. by Ben Graham).

K.
 

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Red_Bandit,

Manulife has been having a rough time, particularly since it issued $2.5 billion worth of common shares in a seasoned offering at then end of November that diluted the holdings of existing shareholders. That, combined with the slashing of its dividend earlier in the year are likely contributing factors to the stock's malaise. As I understand it, Q3 earnings were supposedly a bit disappointing too.
 

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I thought this forum was for non professionals.

I agree w Robillard's assessment of MFC.

Also...these professionals who recommend companies as buy and sell are inaccurate in their predicitions as the rest of us. LOL!

It is good advice to do your own research/analysis (there is a thread on how to understand analysis better) and make your own decisions.
 
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