A Bear Confessing To A Profit

What really is a bear? As far as significant investing is concerned...? Today, numerous people suppose that it is anyone who takes a position in the expected downside movement of a market, including therefore traders who have small or leveraged positions through retail operations who are taking a position in expectations of a symmetrical reaction (in price) downwards in response to negative fundamentals.

Outside my first office in Howard Street
Perth Western Australia

In reality though, a bear is someone who knows the correct value of proportions or whole amounts of capital (assets).

In today's world, political interests that can have overriding influence over a number of market conditions and even over price itself, subvert the simple idea that price reflects naked real demand versus supply.

Aboveall a bear is good at analyzing the whole picture. One should not be constrained by highly artificial constructs – the listed equity price, the apparent interest rate, stated inflation, even GDP numbers. A thing, has some value in your estimation because it can be sold at a profit. Other than time, that is all there is to it. The fact that few others can see even what the thing is, never mind how little it costs, should be of no major concern to you.

Today, a real bear can see value where others are not merely not looking, but would discard as important or valuable possibilities even if they could 'see' it or them in the first place.

The only thing to be said for standard short positions is that some of them provide a commoditised version of a 'sale.' Many sales, in fact. Selling is crucial to fundamentals.

In other words, I would try not to make the mistake of thinking all the time that everything is already commoditised and available for open trading. Some things are still privately traded. Some things are despised by the investment geniuses of the modern world. And these are the things that escape the megalithic monolithic 'economic' vision of the broad marketplace reflected by the incessantly chattering, if not downright nagging, media.

The tools of modern day economic warfare are all computerised and online-capable. If we were living a hundred years ago those of us wishing to make profits from un-exploited potential might use metal drills and hydraulics and special screwdrivers and so on. But by today, all the 'un-exploited potential' of that past era has already been exploited. Trading one side of an already over-inflated or elevated trading range is not 'being a bear.'

Here is the key question: although we see a low circulation or velocity of cash inside the domestic economy, the question is not 'where is the money,' but rather, where is the value?' The value is 'analyzable' by one's own mind and vision, but it is accessed by the tools of today.

Kelly Brook's legs

Take a look at the image presented by your typical exploitational advertisement – granted this one, I think, is used in places like Turkey, and not in the over-sensitive contemporary USA – the girl is not cheap, and the car is not cheap either. The ordinary 'customer' can afford neither. But the spray can of AXE APOLLO is purchasable by the average person. All three elements are valuable in their own ways. And they all have a financial value too. Human principles place the girl at the top, human ideas about art place the car second, and human imagination includes the relatively inexpensive can of spray inside the realms of the first two. You know, it is always the cheap small thing, when multiplied across a large number of humans using it, that has the highest (real) total profit potential. And that is something worth bearing in mind, when you are being a bear.

You may have observed how, now that monetary velocity has drastically slowed, those with profits and cash are also quite reticent about showing their hands. Certainly there is the listed world of megalithic internet equities – no profits, questionable sales, massive internet 'reach' - and big claims as to capital value. These people do show their hands. But that kind of stuff is not for the bear or the professional investor at all. Rid yourself of the urge to participate in some imagined 'glow' about how to make a profit. And yes, there are always exceptions that stand out – Apple may be one of them in that it has real profits, real sales, a lot of cash, and maybe potential yet remaining to be mined. You might even feel a certain 'glow' if you acquired an equity share in Apple. But it is expensive. Like the girl and the car.

'The cheap small thing...' What is it? Well, Aldus Manutius, when he invented running script, was able thereby to give a tremendous advantage to the Venetian transcript writers. The advantage of speed was paid for by wealthy patrons of trade, rather than by an immediately commoditised consumer market.

The world in which we live today, is not very far different, to the day and age of Renaissance Venice. The traditional Empires of Europe presumed themselves to be unassailable, the religious beliefs and ideas about Nature were solidly held in the minds of the cogniscenti of the times, and the sun turned unequivocally, around the Earth, which was the centre of the Universe. And if Man should fly, God would have given him wings. How quickly these things all changed. How small were the things that caused the change – they were just ideas. A handful of neurons firing in a new way. Oh yes, of course the human is a wonderful, complex, massively valuable thing within the midst of great and networked complexity; but ideas are the key to it all, the thing that makes any of it work satisfactorily. And it is not necessarily costly to have good ones.