Idiosyncracies of stock pricing

I admittedly don’t know much about the stock market. In the past I knew even less and a friend (who works by now in banking) explained to me that a current stock price already includes profit expectations, which is also why it goes down even if profits were strong, if they were weaker than expected.

This is a bit of an absurd idea to me and I just found an illustrating example in a paper:

Intel absolutely dominates the PC market, AMD has been on the ropes for a while (and has been making losses for a while), whereas Intel posts profits on a regular basis. Yet somehow its price changes indicate something else…

Fantasy Football, indeed!

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