Disney has some serious problems, like declines in sports viewing and superhero movies and cable industry trends—secular stuff that’s completely out of their control. Suffice it to say that by the time the MBA students in South Carolina get bulled up on a stock, it is probably pretty close to the end.
That’s behavioral finance, in a nutshell.
This is what I do for a living. I watch the market, not the stocks, if that makes any sense. I am always collecting data. Every person I talk to on the phone, every chart I look at, every tweet or article I read, it all goes into the soup, and from that soup, I am trying to gauge sentiment.
Sentiment tells you everything. Cheap things get cheap, and expensive things get more expensive. Markets are alternately rational and irrational, because people are alternately rational and irrational. Seems like a crazy way to allocate resources, but it works better than all the alternatives.
Jared Dillian is editor of Mauldin Economics' The 10th Man.