Our firm is looking with dismay the possible dismantling of a business as old, some may say, as humanity. Investors are wondering why the stock PUZZY (PZY –Nasdaq GS) keeps dropping despite the extraordinary campaign to praise it, in which we should include an overlapping support from institutions as strong as the church -despite they are supposed to have little knowledge on the subject.
Looking back, if history could tell us something, we are seeing here a financial instrument that was originally quite cheap until the launch of a massive advertising campaign sponsored by Judeo-Christian-related lobbies some 2000 years ago, after which we witness constant grow that lasted until well entered the XX century, making possible what is today a huge several billion revenue company.
Intelligent investors assumed that its amazing growth rate couldn’t continue indefinitely. They were the least. In fact this stock was the preferred long term investment of Baby Boomers who saved diligently to prepare for retirement and may lose their golden years to a possible investor fraud. As those who invested in Worldcom or worked at Enron, they know today that things are not always as they seem.
Part of the weakness is obviously the result of overall market weakness, but other factors should be considered.
Here’s our sense of them:
After I & II World Wars, producers were not able to make enough goods to meet rising demand, and instead raised prices disproportionately. Inflation was accompanied by quality lowering, especially from the 60’s with fewer functions, some dysfunctions and more consumption, and the appearance of modified products from the 80’s equally satisfactory for more liberal customers which blurred the original product exclusivity. Today’s supply clearly surpasses current demand so prices continue to plummet.
Importation of similar goods produced in developing countries wasn’t seen as a problem in its day. The alleged low quality and unreliability made these goods were considered an “exotic” investment, but not real competition to the respective national equivalents. That was clearly a wrong approach. Today we are seeing in the market many high quality foreign products with a, moreover, extremely easy handling and much cheaper maintenance, at least in principle.
Product disadvantages: Maintenance, repairing and disposal:
This has been a product with pricey maintenance throughout its history which has grown exponentially over the past 60 years. On the top of that, repairing is very expensive and not always a feasible option and disposal, due new ecological regulations, is forbidden.
For those of you, long term investors that heavily invested several years back in this stock, perspectives are bleak. To sell your stocks now could be translated in heavy losses that could put you permanently out of market. So our advice is to covertly diversify your portfolio, if any cash is left in your pocket after this misguided investment.
For new investors, beware of these stocks in the long term. Nevertheless short selling could be a good option, provided it would enables you to benefit from a fall in the stocks share price. And this particular one is in free fall.
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Puzzy stock dropping – Dugutigui