Hi, In Schweser SS 14 it talks about speculative stocks vs speculative Companies. It goes onto to say that almost ALL of the time, the Spec stocks are OVER priced. Is there a reason for why they are overpriced becasue by definition those types of stocks are highly likely to have low/ negative returns. If investors were rational, then wouldnt it be safe to assume that the security will be corrrectly priced or even underpriced? Not a big issue just thought it might be good to understand why they would be overpriced! Any ideas? Thanks
Willy Wonka Bars… Theres a golden ticket in one of them… Even though they cost 10 cents to make…and stores can sell them for $0.99, people really want that golden ticket…so they are willing to pay $9.99. Golden ticket - wonderful future profits for a company. You pay more for the chance of huge rewards