You’re standing in line, waiting to buy a frappucino, and it hits you like a thunderbolt. It is a brilliant idea. Why didn’t you think of it earlier? You love the coffee sold here. You’re convinced this particular coffee company will continue to grow and prosper. So why not buy the stock? You call your broker and act on the idea. You pay $40 a share for Starbucks (I do not have a position in this company). You check the quote a few months later and it is $20.

What does the drop in stock price tell you?