 Good day, fellow investors. Now, as we all know, the stock market is very, very volatile. Stocks go up and down, especially when there is some news. Even stable companies can lose 10-20% in a given day, small caps 20-40% and pharmaceuticals can jump 200% in a day and lose 70% in a day, depending on FDA approval. However, that news that companies have to disclose since 2000 and the Fair Disclosure Act and the 2002 Serbanes-Oxley Act that made companies wherever there is something material they have to disclose it to the public, to the investors, to make the investment environment more transparent. So since then, that news has really impacted the markets and there are some patterns which we will discuss through analyzing scientific articles and what to do and what can we take advantage of the patterns. As always, scientific articles and research is the most underrated research in financial markets. There are professors that spend their lifetimes to do research and then they have 15 downloads of their paper. So really under the radar, because it's complicated, because it's academic. However, if you can translate into normal investing, you can get a lot of value there. So we will look at these scientific papers, we will do two case studies, I will discuss London Mining and Apple and how their stock prices react to news. Let's start with Apple. Here you have the chart from the 8th of January 2007 to till the 19th of January 2007. What happened on the 9th of January 2007, Steve Jobs announced the iPhone. And you can see the immediate positive reaction from just above 12, the stock price of Apple here in the blue went to almost 14. Which outperformed the SAP 500 in the next 5 days. However, after 10 days, investors already forget about the positive news that Apple delivered. It will change the world in the next 10 years. But investors preferred the SAP 500 in relation to Apple. Just to show you how the rest is history, this is the performance. Apple, since the announcement of the iPhone went up 1315% plus dividends. The SAP 500 went up 87% plus again dividends. So this is very interesting how in the first 4 days, 3-4 days there was excitement about the Apple announcement and then it went down and even underperformed the SAP 500 even if Apple would go and change the world. So that's very interesting how if there is some exciting news, in the first days investor rush into that news, however if there is no immediate benefit like the Apple iPhone, there was uncertainties, who will buy it, who will do. So a lot of uncertainties around it, then the stock price again returned to where it was before and even outperformed the market. So always see how Wall Street always looks at certainty in comparison to uncertainty. Even if that uncertainty is extremely, extremely powerful. Like an iPhone that combines phone, music and whatever it was the first thing. That was so revolutionary just 10 years ago. That's crazy how the world evolves and iPhone now is normal for all of us. Nevertheless, it's also crazy how Apple's stock price was at 12. Yes, it was at 12 just 10 years ago, even if now it is where 100 and something. So the first take is that if you look at long-term news, there is really time. Even if there are excitement, investors really need confirmation, they need earnings, they need higher dividends, they need buybacks to buy into Apple. And now everybody's rushing into Apple. However, when the news was out in 2007, people were a bit, okay, yeah, yeah, very interesting, nice, nice, nice. Let me buy Apple now 10 years later at 15 times higher prices. That's how Wall Street works. So if you look at long-term news and understand the long-term impact of those news, you can really take advantage. However, wait a few days because after the excitement passes, usually the stock price returns to its normal way because that news, that positive news is not yet seen in the fundamentals. Now, the second thing that we show from the Apple chart is that after significant news has been released, the volatility increases. As I said, first there is exuberance, but then again, the stock price drops to the previous level if there is no impact on fundamentals. So really take advantage of that volatility. Now, just a funny note on the research scientists from Georgia Tech have found that if there is unscheduled news delivered in December, then the reaction of the market is much smaller than in the other months. So December, everybody's thinking about Christmas, partying, buying gifts and they're not so much thinking, especially analysts. They're not so much analyzing stocks and what goes on and what should we do with the stock market. So if a company reports negative or positive news in December, the reaction of the market is much, much less than in the other months. Very interesting, but that's how it goes. Now, another thing that's very interesting, Wesley Chan reported in his paper in the Journal of Finance, how investors react slowly to bad information, especially with stocks with low liquidity. This means that there is some bad news, but then investors look at the stock market a day and then they hope that the stock price will not react that much negatively to the bad news. However, then the bad news slowly starts impacting the stock price and then everybody rushes to sell. So we have a stock price drift after bad news. The first drop is let's say small and then the stock price drifts, drifts, drifts to the subsequent final price where it stabilizes. Again, with increased volatility. This means that investors first hope that the bad news will not affect the stock. However, then in loss aversion, as they see their losses mount, they start selling in panic, which makes the stock price drift to the final price, to the final normal price where it stabilizes. So always be wary of that, especially if there are smaller stocks, not so followed stocks. If you sell immediately the first minute, you can buy then later, really, really on the chip. That is something I did with Nefsum. When they announced that they will cut their dividends from 5% to 1%, in the first minute, when the market opened, I sell my complete position. A few hours later, I think in the next days, I bought back all the amount that I have sold. So I had much more shares. I lost some money because the first drop was initial, but I didn't live. I didn't hold the bag through the longer drop. Same with Amfi, but I didn't buy back in for now. We'll see if I will do ever it later. So really, try to think. I will not mention this anymore in the videos as the channel is growing. But if you have a liquid stock, if there is negative news, you can really sell immediately because the reaction is always a little bit late from investors because it's not followed so much, but institutional. So they are mainly retail investors and retail investors are slow because you are not there to watch the market from the minute it opens or an hour before it opens till it closes, waiting for news. You are doing something else, you have a job, you have this, you have that. So it takes time for you to react. And if you see the stock price going down, you react later and you sell, hopefully to avoid future losses, thus loss aversion. However, those who are quick can take advantage of that, sell immediately and buy back later if the news is negative but not impactful to the stock. So think about it, I won't mention it anymore. So who has subscribed to the channel? Who hasn't? We'll lose this information if they don't look back to the video here. We can share everything with everybody. Then we would have efficient markets and that's something that we don't want. Now, an interesting situation happened last week with London mining. The stock price was around 7 and then London announced a new changed operational outlook for the next 10 years where they have lowered the forecast by 20% for the next two years, increased the investments, but from 2021 they have increased production by 20% for the next 10 years. Of course, Wall Street doesn't like long term at the sacrifice of short term, doesn't like spending money, doesn't like investing, they want dividends now and the stock price dropped what 2023% in five days. So the company announced increased production in the decade going on from 2021 and a little bit lower production now. So there will be lower cash now, lower cash in the next one, two years and that's what something Wall Street doesn't like. We have already discussed hyperbolic discounting, so always if you're a long term investment, if there is short term temporary negative news you can really take advantage if that is short term temporary news. So you have to see if that bad news will pile up and really go into disaster creating a value trap or it's just temporary, the company is sacrificing short term for the long term, family owned, London mining, they think long term, not short term. So very interesting how that works and how Wall Street reacts to that. I still have to put all the new data in my model to see what's the value of London mining. I will share that with you. It's not that difficult to do and it's not that valuable because I think many analysts do it so we can do that, however, give me some time to see what's the real value of London and what's the discount rate and what is the discount or if the stock is still over there. So we have to adapt to the market. You don't want to be a long term buy and hold investor that just holds the bag. You have to also think market has a lot of irrational participants and we have to take advantage of that irrationality. Yes, fundamentals, value, business analysis is good but we are not there to be stupid and say, okay, I'm a long term investment and I don't care if the stock price falls 50% because that's the opportunity. So we have to take advantage of opportunities and not be bag holders because we have a slow motion or long term investment horizon. Thank you for watching. I'm looking forward to your comments and I'll see you in the next video.