Froth and mania
Feb. 8th, 2021 02:07 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
walkitoutWhile some of the GameStop stuff is behind us, apparently, our present and immediate future hold more examples of ... odd. Like, Dogecoin is back? I thought that was a joke, and now, if you use recent trades as an indication, it is worth billions (it is not worth billions; don’t use recent trades as an indication) (none of this is financial or investing or other advice other than Words to Help You Get to Sleep at Night). Elon Musk’s Tesla is buying BitCoin and saying they will accept BitCoin as payment (in the future, maybe? Unclear if they are accepting that now).
The whole thing reminded me of that quote everyone loves so much, but maybe is not actually a Benjamin Graham quote.
https://quoteinvestigator.com/2020/01/09/market/
Graham’s 1934 book has this paragraph in it, according to the article linked above:
“In other words, the market is not a weighing machine, on which the value of each issue is recorded by an exact and impersonal mechanism, in accordance with its specific qualities. Rather should we say that the market is a voting machine, whereon countless individuals register choices which are the product partly of reason and partly of emotion.”
None of that long run / short run nonsense (which may or may not have arrived with Buffett some decades later)! A book published in 1934 was necessarily written before that, which means before the SEC came in and imposed order. If the stock market has ever been a weighing machine, it is in the wake of the SEC’s actions, and before SEC enforcement started to be curtailed under Reagan. The stock market was not very exciting during those decades.
I read an analysis some years ago that the demographic transition is ridiculously great because you get _one_ generation of young adults who can work and who are not burdened (yet) by child / elder care. Once the step down in births has ticked along for a while, the now far fewer offspring will at some point have to take on the elder care responsibilities, and if the society is to continue at all, some amount of reproduction as well. I cannot help but feel like the last few decades on the market were the results of having had heavy handed enforcement, and then easing up. Before the crazy really got going again, there was a halcyon, a Goldilocks period of people still mostly being well-behaved, but unconstrained from taking bold action.
Once it becomes clear that it is a true anarchy, the well-behaved are overwhelmed by the not well-behaved and the options going forward are all unattractive. I’m not sure we are all the way there — I hold out hope that enforcement of existing laws and norms could return us to a better way of doing business — but we are rapidly approaching some kind of point of hard to turn the boat around.
The whole thing reminded me of that quote everyone loves so much, but maybe is not actually a Benjamin Graham quote.
https://quoteinvestigator.com/2020/01/09/market/
Graham’s 1934 book has this paragraph in it, according to the article linked above:
“In other words, the market is not a weighing machine, on which the value of each issue is recorded by an exact and impersonal mechanism, in accordance with its specific qualities. Rather should we say that the market is a voting machine, whereon countless individuals register choices which are the product partly of reason and partly of emotion.”
None of that long run / short run nonsense (which may or may not have arrived with Buffett some decades later)! A book published in 1934 was necessarily written before that, which means before the SEC came in and imposed order. If the stock market has ever been a weighing machine, it is in the wake of the SEC’s actions, and before SEC enforcement started to be curtailed under Reagan. The stock market was not very exciting during those decades.
I read an analysis some years ago that the demographic transition is ridiculously great because you get _one_ generation of young adults who can work and who are not burdened (yet) by child / elder care. Once the step down in births has ticked along for a while, the now far fewer offspring will at some point have to take on the elder care responsibilities, and if the society is to continue at all, some amount of reproduction as well. I cannot help but feel like the last few decades on the market were the results of having had heavy handed enforcement, and then easing up. Before the crazy really got going again, there was a halcyon, a Goldilocks period of people still mostly being well-behaved, but unconstrained from taking bold action.
Once it becomes clear that it is a true anarchy, the well-behaved are overwhelmed by the not well-behaved and the options going forward are all unattractive. I’m not sure we are all the way there — I hold out hope that enforcement of existing laws and norms could return us to a better way of doing business — but we are rapidly approaching some kind of point of hard to turn the boat around.