Investors like Warren Buffett are unlikely to operate in the fog of war of narratives and fundamental analysis like small-time players. They likely have access to unique information and possibly can influence narratives favorably. Of course I can't prove it; large, influential players would make sure their true operations are concealed. The dice are loaded against the little guy.
Aug 17, 2023·edited Aug 17, 2023Liked by Alex Krainer
Thanks Alex that was awesome! I had questions as to why Buffet & Graham choose to enhance this "value investor" myth; you answered most of them. However, I do ask myself if that Value Investor myth is more supportive of the notion that Buffet & Graham are these GREAT investment minds. Being a Trend follower seems to undermine that "Legendary Investor" myth. Just a thought. I couldn't agree more with your thoughts on money. This culture tries to shame us for seeking to accumulate more money, more WEALTH. Meanwhile, many of the 'shamers' are suckling from the Gov teat.
Momentum over value investing with the data to back it up. And I would take it one step further and recommend the book on mass formation, 'The Psychology of Totalitarianism' by Mattias Desmet.
He discusses the first principles of group dynamics, specifically on mass formation, natural examples (starling murmurations, Stalinist Russia) and intentional (Hitler's Germany, C19 pandemic).
This crosses into mass formations in investment, eg. 90's tech bubble, real estate bubble ahead of the 2008 financial crisis, and perhaps an explanation more specifically of Tesla.
Aug 17, 2023·edited Aug 17, 2023Liked by Alex Krainer
The old saying that goes "The market can stay irrational longer than you can stay liquid" hints at these things. It's a world of difference between the linear, physical, and personal world of the physical market versus the chaos of a systemic, conceptual, impersonal world of the stock market that allows for effects without clear causes, ships without captains, and systems without anyone truly being able to control them, only influence them.
This is familiar ground for me - while I didn't cover relevance to the market in particular, I write about this in Global Paradox 2023, a personal commentary on John Naisbitt's Global Paradox from 1994.
The root cause, I feel, is simply that there's too much information to take in and we therefore default to narrative to simplify things down from complex phenomena to organizing principles or routines - something I call Communication Overhead, which I talk about here.
Point being, we need narratives to summarize, and trend following just isn't "reassuring" or "sensible" enough, results notwithstanding. Narratives are linear and therefore closer to the classic cause-and-effect, while trends are not.
I have never understood how Telsa could have the stock price it has it has hardly ever been profitable if at all its products are so so (compare a MB to a Telsa the interiors are night and day difference for around the same price) I know he gets money from other companies for carbon credits but to be valued above GM, Ford, etc. makes no sense. Or is this because there is so much speculative money out their trying to find a home. Maybe someone could help me out.
Aug 17, 2023·edited Aug 17, 2023Liked by Alex Krainer
Off Topic but...really Spot-On: "Eric Hecker (Antarctic Scientist; other credentials too long to list) warns us of DEWs about a month ago. Now, Maui looks like a bomb hit it. There’s no prior vegetation in a lot of the areas where they had “wildfires.” This is not the end of the DEWs. Not by a long shot." https://twitter.com/CheckThatBlue/status/1690035641797488640
Investors like Warren Buffett are unlikely to operate in the fog of war of narratives and fundamental analysis like small-time players. They likely have access to unique information and possibly can influence narratives favorably. Of course I can't prove it; large, influential players would make sure their true operations are concealed. The dice are loaded against the little guy.
Thanks Alex that was awesome! I had questions as to why Buffet & Graham choose to enhance this "value investor" myth; you answered most of them. However, I do ask myself if that Value Investor myth is more supportive of the notion that Buffet & Graham are these GREAT investment minds. Being a Trend follower seems to undermine that "Legendary Investor" myth. Just a thought. I couldn't agree more with your thoughts on money. This culture tries to shame us for seeking to accumulate more money, more WEALTH. Meanwhile, many of the 'shamers' are suckling from the Gov teat.
Thanks again Alex very provocative post!
Momentum over value investing with the data to back it up. And I would take it one step further and recommend the book on mass formation, 'The Psychology of Totalitarianism' by Mattias Desmet.
He discusses the first principles of group dynamics, specifically on mass formation, natural examples (starling murmurations, Stalinist Russia) and intentional (Hitler's Germany, C19 pandemic).
This crosses into mass formations in investment, eg. 90's tech bubble, real estate bubble ahead of the 2008 financial crisis, and perhaps an explanation more specifically of Tesla.
The old saying that goes "The market can stay irrational longer than you can stay liquid" hints at these things. It's a world of difference between the linear, physical, and personal world of the physical market versus the chaos of a systemic, conceptual, impersonal world of the stock market that allows for effects without clear causes, ships without captains, and systems without anyone truly being able to control them, only influence them.
This is familiar ground for me - while I didn't cover relevance to the market in particular, I write about this in Global Paradox 2023, a personal commentary on John Naisbitt's Global Paradox from 1994.
https://open.substack.com/pub/argomend/p/global-paradox-2023?r=28g8km&utm_campaign=post&utm_medium=web
The root cause, I feel, is simply that there's too much information to take in and we therefore default to narrative to simplify things down from complex phenomena to organizing principles or routines - something I call Communication Overhead, which I talk about here.
https://open.substack.com/pub/argomend/p/communication-overhead?r=28g8km&utm_campaign=post&utm_medium=web
Organizing Principles themselves are simplifications and likely the building blocks of narratives. They keep things simple when they get too hairy.
https://open.substack.com/pub/argomend/p/the-totalitarian-organizing-principle?r=28g8km&utm_campaign=post&utm_medium=web
Point being, we need narratives to summarize, and trend following just isn't "reassuring" or "sensible" enough, results notwithstanding. Narratives are linear and therefore closer to the classic cause-and-effect, while trends are not.
I have never understood how Telsa could have the stock price it has it has hardly ever been profitable if at all its products are so so (compare a MB to a Telsa the interiors are night and day difference for around the same price) I know he gets money from other companies for carbon credits but to be valued above GM, Ford, etc. makes no sense. Or is this because there is so much speculative money out their trying to find a home. Maybe someone could help me out.
Off Topic but...really Spot-On: "Eric Hecker (Antarctic Scientist; other credentials too long to list) warns us of DEWs about a month ago. Now, Maui looks like a bomb hit it. There’s no prior vegetation in a lot of the areas where they had “wildfires.” This is not the end of the DEWs. Not by a long shot." https://twitter.com/CheckThatBlue/status/1690035641797488640
https://twitter.com/search?q=DEWs&src=trend_click&vertical=trends
Great piece. And thank you for the books.