It never made sense for X to be valued that high, nothing on the balance sheet indicated X being worth so much. So why did people pay so much for United Steel? Am I missing something?
look at the chart... they were stuck short... and correct about the move down to 20 as well, however they didn't see the parabolic SQUEEZE coming.
They produced significant earnings growth in 2007 and continued in 2008, providing upside guidance. The market looks forward and bid up the stock. X followed through nicely by providing $18.24 earnings per share in 2008, making the $180's a very reasonable price at the time. By the time X was beating its upside guidance, though, the market was beginning its free fall and in line with looking to the future, X's price fell off a cliff and its 2009 EPS turned out to indeed be awful.
No THAT was pure idiocy IMHO. There was NO fundamental reason for X to trade above $45. What I really loved is how Goldman raised them to a conviction buy after price had made a huge run up, then it sold off hard on some bad news and Goldman lowered them to buy from conviction buy
They were a high growth story at the time, and the high growth was expected to continue. High growth gets priced in, and as soon as it slows, watch out.
You have to hand it to Warren Buffet. The guy ignores media pundits, analysts etc.. and does his own homework before buying a stock or company. No one gives information for free. When someone tells you to go long a stock, or recommends one there is an ulterior motive. And this is why he has been so successful. The secret is ignore the masses, do your own due diligence.
goldman conviction buy doesn't suprise me, how do you think they have flawless quarters? same thing they've been doing with the Euro as of late.