Following Amarin (NASDAQ: AMRN) stocks recently has been like riding a roller coaster. After a huge build up late last week, the stock declined early this week; only to ramp up yesterday and fall yet again today. It’s kind of funny though. Every time we start seeing drops of more than 5% we start to see “The sky is falling!” types of comments on StockTwits.com, Yahoo! Finance, and several others. So, today I thought I’d write about why the sky isn’t falling, and more importantly, why drops like this following major inclines are not only OK, they’re healthy!
Don’t Be Concerned With Amarin (NASDAQ: AMRN) Dips
I know, it can be hard to take. On Monday and Tuesday, Amarin stocks lost more than 10% each day. Today, the stock is down by over 4% so far (1:25) and could fall even further. So, how is it that I can sit here and be calm about it? It’s simple…
First off, I’m not calm about it, I’m doing the happy dance! The reason is simple. Amarin stocks jumped by more than 20% per day on both Thursday and Friday of last week. So, in 2 days, the stock grew by more than 40%. Although that may seem like a great thing, it really isn’t. Now, hear me out because I’m not knocking growth. I actually love growth. The problem with the massive growth we saw however is this…
IT JUST ISN’T SUSTAINABLE!
What we saw on Monday and Tuesday, as well as what we’re seeing today, is the market’s way of saying, “I’m not going any higher because a fall from altitudes any higher could really hurt! The reality is that following the analyst upgrade on Thursday, investors got incredibly excited; hoping to get their share of the fresh baked profit pie. As growth happened, they got more and more exciting, pushing the stock up faster, and in my personal opinion, too high.
As a result, Monday rolled around and wouldn’t you know it; what goes up must come down. The fast rate of growth scared investors. Sure, the analyst said the stock would make it to $10 per share, but he didn’t say that it should happen in two weeks. So, the market corrected and it was back to gains on Wednesday. Unfortunately, those gains seemed to be a bit too much as well as the stock has corrected a bit today.
Imagine What Would Happen If Amarin (NASDAQ: AMRN) Stocks Didn’t Correct?
Could you imagine it? Let’s say the stock just continued to climb; caused by investors with no regard for risk. Then, bad news happened…Imagine how many people would lose a fortune! The bottom line is that growth is a great thing; but in the stock market, slow and steady wins the race. So, when things go a bit too fast, healthy corrections happen to put them back on track.
So there you have it, there are not pieces of the sky falling on our heads, the Nile River isn’t drying up, and I don’t think we should be worrying about healthy corrections in Amarin stocks! Thanks for reading!
What Are Your Thoughts?
Do you have an opinion on this topic? If so, we’d love to see it in the comments below!