iknoknot

The Most Dangerous Place to Get Investing Advice

great article (and comments)

Forgetting periods of mass hysteria... the 'game' of market (be it gold, stocks, bonds, tulip-bulbs, etc.) is arbitrage, which is inherently relative to the 'real value' of that market.

An obvious idea until you try to assess that 'value'. Is it buildings and trucks (pretty safe to estimate)?, or brand value (?). Add to the buildings and trucks, the recent concept of 'efficient information systems' like amazon, google, and ebay, where the internal information flow mastery is every bit as real as a truck, but much harder to measure... what is a fair book value?

As an optimist, I like to trust the annual/quarterly reports, but ala Adam Smith's anecdotes in the timeless 'The Money Game', creative accounting and greed often leave reality behind. How many more Enrons are lurking out there?

Dylan's advice makes sense in most contexts, which is all one can ask for in such an article - Additionally, his points make even more sense if you consider the inversion of any single element: e.g. would you invest in a company with a CEO that didn't have and interest in the firm? Is it wise to buy into something that you know nothing about? If so, how can you estimate the exit point?

thanks for the good read. it keeps the gears going.

good luck out there!

--ikk