reversal of capitalism

Im not sure if this belongs in philosophy, social sciences, psychology, religion, or natural science… it’s about investment and speculation on value. It shows the errors of the current trend in speculation in poetic terms and more honest than I could use them, but somehow very insightful.

It is logical that when one invests in falling company that this company will increase in value will rise. It is also logical that if you invest in a rising market, it will increasingly resist change.

Capital also works the other way around - it is just slower, more gradual, and more versatile, more involved, less objective. Not: It becomes better now therefore I invest in it, but: I invest in it, therefore it will become better.

Interesting and I have subtle shades of understanding, but honestly don’t understand.

As to people, how is this true? And I ask with an open mind, but I it seems the opposite is true; the opposite of the opposite. I invest in one on the rise, I don’t invest in one in his decline; he is who I would avoid, or invest in so as to - what’s the term?- do what would be the metaphorical equivalent of buying a company with low stock prices so as to sell the company’s capitol piece by piece.

I’m thinking in these terms within those on these very forums we share. Two people in particular come to mind, one whose stock is exceedingly low, and who is definitely a gamble, but to invest in - to improve; as you say - may be very worthwhile. While the other’s stock is toxic if considered a part of a sustainable entity with potential for growth, but as something to take apart piece by piece, with no relevance to what was once the whole: very useful.

This is well-understood, by everyone investing in any serious way - it’s not a great secret, hidden from the masses. Although strictly, it’s not simply whether it’s falling or rising - if you buy when it’s expensive (but falling) and sell when it’s cheap (but rising) you’ll lose money. You buy when it’s undervalued and when the first derivative is positive, sell in opposite conditions.

It’s also not logical that when one invests in a falling company, its value will rise. It has to do shrewd things with the money it raises to increase its worth, otherwise you’re pumping money into wasteful, shortsighted projects.

The catch is this: pretty much all of the information on whether a company’s a good investment is public and worked in to the price. So if a company’s equity is falling, it’s falling in spite of the fact that falling stock is a good time to invest, so it’s a sign that the risk that it will keep falling and not recover is high. There are a lot of intelligent people taking in a lot of information all day every day, all around the world.

Well yes. And 1+1=2. Let’s move a bit beyond the obvious.

It has to do intelligent things with its money. Certainly not necessarily ‘shrewd’ things.
Yes, of course. Every entity has to act intelligently with resources it’s given in order to increase in vitality. Of course this is a given. One should not invest in companies known to be run by complete morons, but one can invest in struggling companies that have displayed solid productivity and strategies in the past.

But a critical mass of ultra short term non-contextual investments, purely based on historical precedents of statistical patterns.
This means that those considerations you mention simply do not count, matter. What matters most at this point is speed and obscuring the reasons for your investments.

Critical mass is key to understand the OP’s concept.

By the way, a very limited amount of information is actually worked into the stock price. I’ve been watching the markets and its very doable to predict rising prices based on some technical knowledge of the products and insights into markets, basic human psychology. Also, Smears successful investments kind of disprove your point. What’s worked into the price is certainly some projected value but does definitely not include the actual short term future of the company’s worth, I’ve found out fairly quickly.

People had been telling me the same, but they’re wrong. In ILP terms, when it comes to stocks, you should trust Smears over Von Rivers.

I agree with that too.

Stock markets work entirely on human psychology.
The cornerstone of the concept of the technical analysis of either a complete market or a particular share is nothing but pure human behavior.
Having said that, it also tries to reflect actual fundamentals but never able to do that successfully.
Markets either use to fall short of fundamentals or cross those.

with love,
sanjay

Yes. And because the stock exchange is built around these fundamentals, it’s fairly easy to get ahead of it.

In Los Vegas, you win by betting on the house to cheat.
The stock market is no different.

Precisely. Well that and the obvious profiting off new markets.

If you can see a new market opening, you can safely bet on it in the first months, and if there are negative contingent developments in existing markets you can bet on a short term exhaustion of the value potential after which the stocks are dumped en masse.

So it’s both mass psychology and a kind of Sun Zu like psychology that you need to now, but a philosopher knows both of these quite well.

A third option is to create a market.

There are 3 terms now long short and ultrashort. The minute traders are mostly run on programs of huge volumes where an upward lift of a few cents can cause a sell if the trade doesent exceed the fee for the transaction.

 The longer the hold, the more do fundamentals factored in.

    The decisions around how long to hold is made by predicatipns of probable outlook.

That’s the “dead” way of going about it. I am interested in investing in actual values, things that will be increasingly valued over time. This is the psychology aspect and that’s what interests me. Money isn’t as interesting, it’s the growth and how you can look into the future if you understand it.

If it’s obvious, it shouldn’t be too hard to at least state it correctly in your OP

It has to do intelligent things with its money. Certainly not necessarily ‘shrewd’ things.
Yes, of course. Every entity has to act intelligently with resources it’s given in order to increase in vitality. Of course this is a given. One should not invest in companies known to be run by complete morons, but one can invest in struggling companies that have displayed solid productivity and strategies in the past.
[/quote]
So why are they struggling? New management? Outmoded business strategy? Asset stripping? Why will your investment change that?

That’s how a lot of quants work - ignore the “story”, look at mathematical patterns. There are computerised trading systems operating on the microsecond level. It makes markets unstable and jittery, much “noisier”, but doesn’t mean the considerations “don’t count”. Profit warnings still cause a long-term drop in share price, large infrastructure projects boost the share prices of those who benefit. Context is still there.

I wish you all the very best with your investments.

To the OP, this is good to remember, the power to use capital not just to ride the flows of value but to actually create value, to create flows.

In terms of focusing investment in places where one can not only capitalize off of current or expected value-gain but also to directly cause value-gain, as a consequence of one’s investments, this is good. Capitalism indeed works both ways, as it should. So the sticking-point is, what to do about falling/failing value?

Whatever information is included in a stock price will reflect short and long-term predictions of value; but most stocks are not traded individually but as parts of larger aggregates, huge portfolios. And as my investor friend likes to tell me, the market is “childish” and “immature”, it over-reacts in the ultra short-term; a single bad news story can spark stocks to slide, meaning that individual stocks also see their “expected future value” fall as the bundled portfolios in which they are contained fall.

Market on the large scale are hyper-reactionary. This is a problem because the small scale, individual company stock cannot dissociate itself from the large scale. Now we get into large scale manipulation games designed to make money at the expense of other losses, the whole “buy low and sell high”. In a way this logic is more about capitalizing off of the reactionary and highly mutually dependent nature of markets and less about literally CREATING VALUE in the long-term. Technically it is more like a parasitic sucking of value from existing potential and converting it into cash.

And cash is not value, cash is the potential to be value. So one kind of potential is being traded or sacrificed for another. But since that ends up returning back into markets as they stabilize (recover to exist in a temporarily less hyper-reactionary mode) the whole process continues to sustain itself. Value increases in the sense that life capitalizes off of life; but any specific values continuing to exist is not guaranteed even with a “rising tide”.

It is also useful to note that at present, markets are elevated due to EXTREME debt accumulation. In such a context of the large scale, any individual values-assessments, predictions or value-investment creation will be far less certain and less potent, less “grounded in reality” than otherwise.

When the body becomes hooked on simple sugars it experiences a temporary uplift in value followed by a more long-term decrease of value and decay; if the sugar intake continues, values will continue to slide until they vanish, which is to say until their potential is exhausted and becomes appropriated by other, more rational-real self-valuings.

Loved the opening post.
Unfortunately the truisms always allow for exceptions. Sometimes the darkest hour is followed by death, the nadir of a company can be followed by dissolution or dismemberment.
The Obama administration invested into Solara and it bit them in the ass. What this illustrates is that the future value of a company does not depend entirely on the Market or even investors like yourself, but in the consumer who agrees, or not, with the projected value.

It’s all about particle physics.

Bump