Nope I haven’t bought it yet.adrian2 wrote:BMO has traded yesterday between $61.62 and $62.35, so I'm guessing you haven't bought yet?
Using your tuna analogy;
I would prefer to think from the point of view of the store owner. Why is Tuna marked down 30%. There could be several reasons.
To get people into the store, you sell at a loss to make profit else where.
There is a more profitable product so you get rid of most your tuna so you can have more shelf space.
To retain customers you have to sell your tuna at that price because of competition.
Tuna is not selling at the posted price because the publics’ appetite for tuna has declined.
The store bought at a huge discount and is passing the savings to its customers.
Whatever the reason the store owner isn’t making the profit he made in the past.
In most the cases he is taking a loss or getting out at break even. As a store owner you want to turn your stock over, you rarely consider buy and hold.
So for the retail customer it makes sense to stock up at the sale price. For the retailer it is a different story. He knows that all the tuna lovers have stocked up on tuna. When he takes it off the sale price, what customers will be left to buy his remaining stock? Also now that it has gone on sale, the customers are likely to wait for another sale before they buy again.
The only way the customer will be tempted to buy is if the price of tuna starts to go up. If the retailer starts pricing tuna at 3.59, then 3.69 and increases it each week, if the demand is there, the consumer soon thinks that he had better stock up now before it gets to $4.99.
If there is no demand the price will stay the same or come back down.
So I watch the price and if it starts to go up with demand I will buy some, if not I’ll see what the consumer thinks is trendy today, and try and take advantage of that trend.
It didn't look like there was much demand for BMO @ 62.35. One of the retailers started marking the price down.