The short term price theory requires that anyone selling at those short term high prices is selling to someone convinced that prices will go higher in the future, i.e. that you've tricked them.
Price volatility is an indication that either economic conditions are changing rapidly which affects the long term prospects, or that people are very unsure about what the long term prospects are.
It is not an indication that companies are being rewarded for eating their seed corn.
BTW, years ago, I knew a CEO who believed in manipulating the accounts to boost the short term at the expense of the long term. He made the mistake of telling the press he was doing this. The stock immediately tanked.
If the short term pricing theory was correct, the stock would have risen.
Then we have companies like Amazon, who explicitly say they are sacrificing short term profits for long term growth. The result? The stock price has soared to incredible heights.
Price volatility is an indication that either economic conditions are changing rapidly which affects the long term prospects, or that people are very unsure about what the long term prospects are.
It is not an indication that companies are being rewarded for eating their seed corn.
BTW, years ago, I knew a CEO who believed in manipulating the accounts to boost the short term at the expense of the long term. He made the mistake of telling the press he was doing this. The stock immediately tanked.
If the short term pricing theory was correct, the stock would have risen.
Then we have companies like Amazon, who explicitly say they are sacrificing short term profits for long term growth. The result? The stock price has soared to incredible heights.