Dec

2

 To what extent can the concept of epidemics be useful in considering the performance of individual stocks? The key variables being the number of infected, the chances that a person with a disease will have contact with the next, and the chances that once a contact occurs that the disease will be transmitted with its consequences, and the time to incubate once contact is made, and finally the chances of becoming immune once contacted. The comparable things would be a product that good or bad in the case of that notorious company that's caused such damage, the chance the good product will be noted and passed on by a customer, the chance that the product will be bought by the next customer, et al.

Alston Mabry writes:

Here is a nice brief explanation of epidemic waves.

Gary Rogan writes:

To be thought of as an epidemic, the company should have a ground-breaking new product and, preferably but not at all necessarily, itself be relatively new. It helps if the product appeals to young people, it also helps if there is a social aspect to the product, either in the form of communications, fashion, status. The vast majority of such companies are either in the technology or fashion business, with most of the rest in some sort of end-consumer business. Most companies don't seem to fit any of these descriptions. They grow or fail by finessing their business or strategy without any type of sudden dramatic growth.

Russ Sears writes:

It would appear to me that any attempt to consider how infections spread within the financial world should start with the investor, and their attempt to pick the strongest, shun and avoid the infected, and attempts to acquire herd immunity by grouping with those who appear to have a natural immunity. Any "epidemic" to an individual stock, sector of stocks, or even market often seems to be a meme caught by the investor, creating the sickness of fear, and damaging the stock.


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