Value traps and the issue with the "Price Anchoring Bias"
A lot of people keep falling for value traps fall and a bias known as "price anchoring" without realizing it. They see a stock crash and think its automatically cheap just because it used to trade way higher.
PayPal is a perfect example. People kept buying it all the way down because they remembered when it traded above 300 dollars. At 200 they said it was undervalued. Then at 150. Then at 100. It just kept falling and falling and people just blindly kept buying thinking they're warren buffet.
The same thing just happened with NVO A lot of people though its safe just because the stock already dropped a lot from the highs. But a lower price doesnt automatically mean lower risk. Expectations were insanely high and when expectations change, stocks can keep falling way longer than people think.
And now some investors might be walking into the same trap with Intuit. People see a decent company and assume every dip is a buying opportunity. Thats exactly how value traps start. If growth slows or the market stops accepting premium valuations, the stock can reprice hard even if the business itself is still good.
The market doesnt care what a stock used to trade for. Sometimes the old price was the mistake. investing is not as simple as stock fall me buy stock me make money when it go back up.