Two Big Movers that Traded the Wrong Direction: Sina Corp (SINA), SodaStream International Ltd (SODA) and More

At this point, I see no way to justify Sina’s large valuation or it bullish move higher. To put into perspective, the company is three times more expensive than SodaStream (compared to fundamentals) yet SodaStream is growing eight times faster. Therefore, I would not buy Sina at these levels, and believe it to be a value trap.

Conclusion

In my book, Taking Charge With Value Investing (McGraw-Hill), I examine human behavior and the psychological effects that take place in the minds of investors when a stock shoots higher or falls drastically lower (think roulette at a casino). For many investors, chasing these trends is common, even addicting, and very few are capable of realizing their losses as a result of the occasional gain. Investors need to avoid this behavior, and not look at the performance and then the news, but rather read the earnings report first and then make a decision based on the information within. By doing so, you will be able to find the inconsistencies and a distinction between performance and fundamentals; which creates value and allows for large returns.

The article Two Big Movers that Traded the Wrong Direction originally appeared on Fool.com and is written by Brian Nichols.

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