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.
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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.
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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.