(1) When we get it right then we get it wrong, it is better not to get it right at the beginning. But it is actually better to realize we have gotten it wrong before getting it right.
(2) Sometimes, market valuation reflects the company actual earning at that point of time. So when the price moves up, it moves up consistently with an improved earning for the coming financial year = short term future earning.
Company earning is hardly to be double or triple in a short period of time (it is possible but in a certain types of business, especially those business with economic moat).
If the company's revenue & earning are not consistently going up, the stock's price that moves up a lot maybe by double or triple, it could probably led by market overreacted for certain catalyst, then the price will drop back to be adjusted to its short term future earning or to current earning in a short period of time.
(3) A disaster happens when after doing some M & A, the company reported a significant lower revenue, or higher revenue but with significant lower earning.
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