A Quick Look Back at History
MicroStrategy, a company many people now associate with Bitcoin, was once in the headlines for a completely different reason. Back in March 2000, its stock was flying high at around $330 (see the image below).
But within just seven days, it crashed to $60. And a month later, it had dropped even further to just $23. This was a shocking fall — a 61% drop in a single day and a 99% drop within a year.
What Triggered the Crash
The sharp fall in MicroStrategy’s stock came after the company announced it would be restating its financial results. The promoter admitted that their accounting methods might not be right for the future and that they would need to present the numbers again. This announcement destroyed investor confidence because the earlier growth in stock price wasn’t supported by solid numbers. There was nothing real behind the hype.
Blind Trust Can Hurt Investors
This example shows how dangerous it can be for investors to blindly trust what companies say. Many times, investors believe everything written in annual reports or quarterly results. They trust that the management has their best interests at heart. But that’s not always the case. Companies often say what investors want to hear — not necessarily the full truth.
The Conflict of Interest
It is important to understand that there is often a conflict of interest when management talks to shareholders. In an ideal world, management would always be honest and transparent. But in the real world, they often speak in a way that keeps investors happy — sometimes ignoring the real problems. So, it’s wise to take their words with caution.
Focus on What You Can See
Rather than only listening to what companies say, investors should focus more on what they can see. For example, if the stock is falling despite positive talk from the management, it is better to believe the trend. The stock market gives you signs — and those signs are often more honest than words. Always pay attention to what is happening, not just what is being promised.
Final Thoughts
The lesson here is simple and timeless: Don’t just listen, observe. Trust what you see happening in the market. It’s always better to follow the reality rather than rely on hopes or future promises. This approach can help investors avoid big mistakes and stay safe in the long run.
