Digging is a virtue for the fortune

Normally we would ask , how could a stock price got crazy? soar 14% in a day, should I jump?
or has it been much more than I can sustain ,and I should give up. Hold on, if that is the case,
you may miss a double or triple bagger here. Psychologically many people believe that market is efficient, a price currently will reflect all the information that have been released. Is it true? However, the answer to this is not that simple, as what we have been fooled about the demand and supply when initially get into stock market. It is not completely true. Yes, the informations may have been released, but small investors , generally , have not been exposed to such kind of information, causing the imbalance in receiving the information. Or sometime even misleading information is released.

What do we do with that? How can we screen the news?
the answer here include two parts, the key value of this stock and the stock trading volume change. For example, the mysd which I bought at 3.7 and it has been doubled by today just in a month , can be used as an example. If just simply looking at its P/E, 489, my god, how expensive it is. The scaring P/E ratio stopped you from stepping further. But checking into its financial structure, you will find that it holds 8.4% of guangfa exchange whose earning is about 1000 times comparing to year 2006. The evaluation of guangfa will play a key role into such kind of plays. And if you pay attention to the trading volume change, should easily find out that the buying volume is accelerating in the past couple weeks. If this is not worthy, why should institution continuously get in? Yes, they know mysd holds shares, they know how much it would worth for those shares that normally we don't know.
Another example is HMIN. Why i won't buy it at current price?
Hmin has been appreciated by the investors after its IPO, giving it much higher expectation than the similar corp in this area, i.e. Hilton hotel. The standard industry PE is around 25, but its TTM pe is 157. Forward PE is 147,hmm, giving its 100% year growth rate, should it be valuated at this level? ask yourself. Whether this growth rate will slow pretty soon? how about in 2 years? It will be reasonable that its price will be evaluated at double of industry level , says 54. and therefore, its reasonable price will be $12. If considering its fast growing step with the appreciation of RMB, says 100 PE with 20% premium, the price will be $26.4. What is the upside if earning is 42 cents this year? estimated price maximum will be $46. Unfortunately it has reached to that level previously. This has accounted all the good news, no surprise. In such a low margin industry, 26% for Hmin, no one would expect above 100 PE valuation. The risk associated with current buying $33 to $46 , will be max of {33-26.5, 33-12} $21 downside. Upside is only $13. Reward/Risk = 1/2. A good buy or not? ask yourself. We may miss the upside move of $4 ~6, but it would be better that we won't be caught into the -$10 trap.

As a result, digging deeper is a virtue of the fortune!