Originally posted at Capitalstool, the Stool Pigeons Wire.
WHAT IS PRICE??????
Price equals the function of information divided by time.
Stock prices and any other asset prices are “particles” brought into being by the interaction of the information field with the time field.
The information field acts on the time field to constantly alter the price of the particle.
However the information in the information field (both past information which is known and future information which is estimated) is viewed through the markets collective bias lens to determine the price value.
This markets bias lens unreasonably discounts the probabilities of certain events:
It tends to ignore the probability of wars.
It tends to ignore most fat tail events.
It tends to ignore the lack of property rights and legal protections of those rights in certain countries.
It tends to ignore accounting frauds/irregularities.
It tends to ignore value metrics.
It tends to ignore the fact that bubbles and fads eventually end.
The market’s bias lens ignores a lot of things.
Understand what the market’s bias lens unfairly ignores and unreasonably discounts and you have an inbuilt advantage over the market.
Your own individual investor lens needs to be clearer, less distorted and see farther than the markets lens.
