What now?, page-5

Many new investors don't understand the share price concepts. When a share price of a company has been nose diving for sometimes, it means the company hasn't been in a good shape (and vice versa), for example SMB was trading quite high last year, to me it was an indication that the company has been outperforming, true enough the share price is trading much higher now.

If you want to takeover a franchine business, would you take over a debt laden franchise business at massive discount or an establish money making franchise business at premium price. Warren buffet will advice you to chose the latter option. It's not about how cheap they are, its about % gain through performance.