09-01-2024, 04:52 PM
According to the Efficient Market Hypothesis, the market price reflects the “true” value of a company as it incorporates all known information. Behind this is the “wisdom of the crowd” concept. This is the idea that large groups of people are collectively smarter than individual experts when it comes to problem-solving and predicting.
Take the example of Sg Bagan Rubber, a Bursa plantation company. When you look at the ROE and share price trend, you can see the share price spiking currently. The last time it occurred was in mid 2021 when the ROE peak at 7.5 %.
![[Image: Sg-Bagan.png]](https://i.postimg.cc/Xvqx0kJ4/Sg-Bagan.png)
I suspect that it is because of the proposed takeover of Kuchai Dev. Is the market predicting that the coming ROE will be higher than 7.5 % because of the Kuchai Dev?
I think that the wisdom of the crowd does not apply to projecting business performance. If any, it probably applies to market price.
But then the wisdom of the crowd only works if every individual in the crowd thinks independently. I am have my doubts about this independent thoughts when it comes to the stock market. I think herd and lemming behaviour are more likely.
So what can you make about the Sg Bagan market price? I am more inclined to see it as herd behaviour rather than the wisdom of the crowd.
When it comes to is business performance, I rather trust a fundamental analysis rather than the wisdom of the crowd. While I have yet to do a fundamental analysis of Sg Bagan I think that its current business underperformed KLK, my reference Bursa Plantation sector. Secondly, as my analysis of the property sector has shown, it is not an automatic ticket to making money.
Take the example of Sg Bagan Rubber, a Bursa plantation company. When you look at the ROE and share price trend, you can see the share price spiking currently. The last time it occurred was in mid 2021 when the ROE peak at 7.5 %.
I suspect that it is because of the proposed takeover of Kuchai Dev. Is the market predicting that the coming ROE will be higher than 7.5 % because of the Kuchai Dev?
I think that the wisdom of the crowd does not apply to projecting business performance. If any, it probably applies to market price.
But then the wisdom of the crowd only works if every individual in the crowd thinks independently. I am have my doubts about this independent thoughts when it comes to the stock market. I think herd and lemming behaviour are more likely.
So what can you make about the Sg Bagan market price? I am more inclined to see it as herd behaviour rather than the wisdom of the crowd.
When it comes to is business performance, I rather trust a fundamental analysis rather than the wisdom of the crowd. While I have yet to do a fundamental analysis of Sg Bagan I think that its current business underperformed KLK, my reference Bursa Plantation sector. Secondly, as my analysis of the property sector has shown, it is not an automatic ticket to making money.