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06:19PM (15 mins delay)
Oct 15, 2009 - 3:12 AM EDT
Sean Hannon submits:When making fundamental trade recommendations in EPIC Insights, there are two main variables. The first is what we think a stock is worth. This number is under our control and allows for creative thinking to derive the fair value of the operating business. Regardless of what is occurring in the economy and the markets, we can create an estimate of value. While this part of the equation is of our own making, the other piece is not. That piece is what the market believes a stock is worth. 
Since buying a stock represents an ownership interest in an operating business, one would imagine that market prices are dependent on evolving business dynamics. Although this is a piece of the puzzle, there are many more pieces. All of us have seen prices react to rumor and emotion as opposed to business development. Therefore, market prices do not always reflect true value.
Source: Seeking Alpha (Oct 15, 2009 - 3:12 AM EDT)
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