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Green Mountain Coffee Roasters Inc. (GMCR), Tesla Motors Inc (TSLA): Is Optimism Bad?

We’ve seen the same extremes hit individual stocks on frequent occasions. Just take a look at yesterday’s big movers:

  • Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) soared 28% yesterday after announcing a five-year deal with Starbucks Corporation (NASDAQ:SBUX), capping a rise of 350% since the stock’s lows last summer, which came from the threat of Green Mountain’s K-Cup technology coming off patent and other missteps from company management. Yet despite that impressive rebound, the stock is still below levels from two years ago.
  • Tesla Motors Inc (NASDAQ:TSLA) jumped almost 25% on news of its first-ever quarterly profit, hitting new all-time highs from its mid-2010 IPO. Yet the stock already values the company at a fifth of industry rival General Motors Company (NYSE:GM)‘s market cap, despite General Motors Company (NYSE:GM)’s $150 billion in sales compared to Tesla Motors Inc (NASDAQ:TSLA)’s roughly $400 million, reflecting impressively optimistic sentiment.

You can find similar long-term moves from other stocks. The rise and fall of Netflix, Inc. (NASDAQ:NFLX) in light of its strategic shift from DVD home delivery to streaming video reflects huge changes in investor sentiment throughout its achievements and miscues. Investors were happy about growth until they decided that a price hike would threaten subscription growth; yet once it became clear that subscribers hadn’t abandoned the service, the stock came roaring back again.

Don’t panic, but be prepared
The current figures on stock market sentiment aren’t reason to sell everything right away. But by keeping tuned to this type of sentiment-driven news, stock investors can prepare their portfolios for the next turn in the market — whenever it comes to pass.

The article The News Stock Market Bulls Don’t Want to Hear originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Green Mountain Coffee Roasters, Netflix, and Tesla Motors . The Motley Fool owns shares of Netflix and Tesla Motors.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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