Oh, here's a shock: There are still financial troubles in Europe and Spain rattled the cage by delaying a decision on whether it will take a bailout from the EU. The market didn't like the nerve-rattling uncertainty that projected and promptly took a tumble. Still, not every stock felt the need to be so dour, and some even rose by double-digit percentages.
But resist the urge to high-five everyone in the cubicles next to you. Smart investors won't celebrate until they know why their stock surged, because without a fundamental basis for the bounce, these stocks could just as quickly make the return trip down.
Not as rich as you think
Nothing like an article in The Wall Street Journal highlighting your shortcomings to send your stock into a tizzy. BP Prudhoe Bay Royalty Trust
Published on a Saturday, the effect was a sustained decline in the royalty trust's shares all week long, falling from Friday's close of $108.87 to Thursday's low of $76.77, a 30% drop in value. At a market value of $1.9 billion now after Friday's recovery, it trades at a much smaller premium to what its assets are worth. There's always the possibility technological advances will improve the ability to extract additional resources, extending the shelf life of the trust, but for investors who were enamored of the high yield from this and other royalty trusts, it once again shows the risks involved of chasing just one metric.
Music to your ears?
Online music service Pandora Media
Earlier this year, Microsoft
As has been a problem for Pandora all along, though, content acquisition costs continue to rise and were up 79% in the current quarter compared with a 51% increase in revenues. Losses widened in the quarter, and while many point to adjusted earnings as making the period breakeven, those "adjustments" were solely on stock options, which I'd argue are a continue business expense and not a one-time adjustment. So I won't be changing my underperform rating on Motley Fool CAPS anytime soon, but let me know in the comments section below if I have a tin ear for how Pandora is progressing.
Pulling the rug out
I agree with CAPS All-Star TSIF that at lower valuations a bet on the biotech made sense, but at current prices it's due for a pullback. But tell us below in the comments box if it still makes sense to get in on Geron now before it progresses much further.
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