The purpose of this article is to serve as part 2 to the article "Why I Left My Cheerleader Pom-Pons At The Door And Sold Activision Blizzard." The original article can be read here.
I recommend readers start by reading the original article, if they have not done so already. It's also recommended they specifically read through the comments in the original article. The comments are important as some inspired this continuation article. Furthermore some of the comments will be referred to here, which will work in conjunction with the reflection on this articles thesis.
The investment world is subject to many theories and hypothesis. One such hypothesis, is the Rational Expectations Hypothesis. This article is not meant to be a lecture, but to sum up this hypothesis, it basically states that investors will act rationally and intelligently in their investment decisions, after weighing all possible information available to them. The hypothesis basically means, that investors should always do what is considered to be rational, and therefore as a result, an efficient stock market should exist. Furthermore, because of this, the price of a stock at any given time, will be a reflection and sum of all of this rationalization.
After reflecting on the many comments submitted from the original article for Activision Blizzard (ATVI), I started to consider that the Rational Expectations Hypothesis is actually flawed. In this continuation article, I will attempt to prove the flaws, by using some of the actual self-proclaimed ATVI investors, from the original article as a reference. This article will also dive deeper into the analysis of ATVI, Electronic Arts (EA), and Perfect World Co (PWRD).
The bullet list below is the consolidated comments from the original article, to be addressed here in part 2:
- ATVI (including Bungie) consistently creates polished video games, will continue to
