What: Shares of A2 MILK FPO NZ (ASX: A2M), Australian Dairy Farms Group (ASX: AHF) and Bellamy's Australia Ltd (ASX: BAL) have crashed on the ASX's final day of trade for 2015.
At lunchtime, shares of the a2 Milk Company, Australian Dairy Farms and Bellamy's were 3.2%, 20%, and 3.7% lower, respectively, despite no company-specific news being released.
So what: The share prices of dairy producers like those above have been on a tear in late 2015.
Vitamins producer Blackmores Limited (ASX: BKL) and infant formula maker Bellamy's were the first to tap into the unprecedented demand from Chinese consumers locally and abroad. Now, even agricultural businesses like Bega Cheese Ltd (ASX: BGA) and Capilano Honey Ltd (ASX: CZZ) have surfed the rippling waves of success caused by Bellamy's and Blackmores.
Now What: Could the swift and deep falls in the aforementioned companies' share prices in the past 24 hours be a sign of things to come in 2016? I don't know.
But the walls of sharemarket history are splattered with the effects of bubbles and busts. From individual shares, to sectors, industries, and markets more broadly.
Therefore, investors must always conduct their own due diligence and have a reasonable basis for buying into any share, especially the most popular shares.
Indeed, it's your responsibility to yourself to have a reasonable basis for buying a share and to differentiate 'potential' from 'reality'. For example, each of these companies above possess the potential to justify recent price rises, but whether or not they'll actually scratch the surface of their opportunity set is another question altogether.
