As a follow up to the last article, the net value over the long run of, lets say, the stream of informational/educational content on this website related to capital allocation (like buying shares), could potentially derive from a somewhat counter-cyclical consideration at times. Meaning, if trends in the markets arise, such as, say, a bubble, then hopefully a rational analysis can be made to derive the probability of the average projected outcome of market participants, rather than adopting a similar sentiment, sparing one if the market is irrational.
Of course, I do not want this to mean the exclusion of certain sophisticated individuals from the readership, who are less prone to the trends and over-corrections of the markets, by saturating this site with statements like, “why this rally is prone to a mean reversion” (though at that stage its already gone up much too far and hence, you know the rest).
I apprehend that the presence of, some might say, excessive speculation is a rule of the markets. It is conceivably the case that inefficiencies in pricing relative to the true value of the underlying asset is the reason value investors can beat the market. Making it ones mission to prevent the large percentage of speculators from ever partaking may be somewhat of a fools errand. At the same time, the maxim, “saving a life is saving an entire world” coupled with the fact that if one person does not overpay for a share, it does not mean another person fills in for them, means that it may be a noble endeavor.
Considering nuance and the complexity of market movements, the underlying economy, and peoples reactions, I imagine it is fair to say that often, what some may conceive is “Mr. Market” behaving irrationally, turns out to be a rather rational movement in the markets. Therefore, it not as simple as suggesting a bearish case when the market is overwhelmingly bullish, as it very well could be justified.
Alas, the study of the markets for some is just a means to an end to make money, and/or is a hobby that one finds very enjoyable. In Joel Greenblatts class notes document…
“I really don’t think the skills that I am going to teach you are very valuable. It is not that you can’t make a lot of money from what I am going to teach you. There are fundamentally better things you can do with your time. My view is that the social value of investing in the stock market as being similar to being good at handicapping horses. There is a benefit to having markets for raising capital; they just really don’t need you.”
The social value of an individual investor is a debatable and variable thing. It may be fair to argue against the preceding quote, but I think there is at least a large grain of truth to it.
That said, I think investing could probably be one of the ways you can confer the most positive impact on the world. Effective capital allocation is important.
Elon Musk has called what Buffett does “incredibly boring” (though Buffett doesn’t find it that way). It does require a certain personality, hence the reason the majority don’t do well.
Much of the preceding has covered direct commentary on general market moves, which is not necessarily the key purpose of the website. It may be that rather, this website could primarily serve the role as a resource for acquiring underlying principles, skills and knowledge, not limited to capital allocation, but for all business, entrepreneurship, etc. Such a broad landscape is susceptible to maybe losing value, with the opportunity cost being great enough to warrant it rather inefficient. Referring to the Thomas Jefferson quote:
“To your request of my opinion of the manner in which a newspaper should be conducted, so as to be most useful, I should answer, “by restraining it to true facts & sound principles only.” Yet I fear such a paper would find few subscribers.” (This is certainly not necessarily the case I think.)
There is a balancing act at hand, between improving your valuation and investing skills, and improving your skills related to a field like, say, biology, or building your own business, or inventing/innovating, etc.
I fear this article is a bit overly-theoretical in a sense.