What happened to NETFLIX?

Multi Year Jiseki

Now as expected we have so many reasons why NETFLIX sharked up. Reason a, reason b, reason c.

For a change can be think that NETFLIX fell because it was an outlier. And outliers are prone to reversion. When we say outlier, we are talking not only of superior performance but also of top performance in a group.

Like Lincoln said, you can fool some people some of the time, some people most of the time but not all the people all the time. The same is true about performance. An asset can outperform a group of assets for some time, for most of the time, but not all the time. This is what was happening in case of NETFLIX, it had reached a state when it was the best of the group and this could not continue for all the time.

So another reason that could have been added to the list of reasons is that NETFLIX was an outlier prone to overconfidence and hype. It had reached a plane where it had become a star. And when you become a star, you are prone to outlier extreme reversion.

The reversion worked and the stock fell 67% off the charts. This again illustrates how all the market components do not move up and fall together. Markets can be sleeping or stagnant while outliers like NETFLIX can make the real moves.

This is the power of Jiseki Rankings. It indentifies the best of the best to short and the worst of the worst to buy.

Mukul Pal 
Mukul Pal, Co-Founder, Orpheus Capitals is a Chartered Market Technician, MBA Finance. He is a member of the Market Technicians association. He has more than a decade of Capital Market experience dealing with derivatives and global assets. He has worked for Bombay Stock Exchange, multinational Banks and brokerage houses in leading research positions before starting Orpheus in 2005.

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