Hi Thomas,
Well, those are all good points. I don't trade my portfolio actively for at least five of those reasons :)
But some deserve comment.
4. Some of us a lazy. No comment
2. We are skeptical that such a dramatic occurrence as the recent bubble and bust sequence will occur again any time soon; lesser variations are both more difficult to detect with confidence and yield less dramatic comparisons. Macro yes, micro no. I suggest that Gorillas are hard to come by, and much sought after. The very stuff that makes them gorillas will make them popular to non GGamers too IMHO. Hopefully later. Anyway, this lends itself to a certain madness of crowds effect and it is quite likely that our Gorillas will be bid up to overvaluedness far more than much more mundane stocks. I have been constantly amazed at the "cabbage patch doll" phenomenon amongst the Boomer generation. So I do think that while we may not see a similar market situation as we've just been through, that GGamers will see reoccurrences on an individual stock basis.
Which is why this point is more important (I think) to GGaming than to the ordinary market.
3. Many of us are skeptical of our ability to make timing decisions with sufficient accuracy to actually achieve the desired results since mistakes in timing can significant reduce the benefit or even produce losses.
I find it strange that this logic is used at all, because it applies equally to the purchase price as well as the sale price. Profit being merely the difference between the two. So there is something that gives confidence in purchase "timing" that does not give confidence in sell timing? This is unusual and I do not understand it. Perhaps worthy of deeper discussion.
I am as skeptical of my purchase ability as I am with my sale ability. Perhaps it is prudent to use the same set of tools to gauge both activities. When results go south, then we'd know something's wrong the tools. And could recalibrate for next time. But if we focus only on the tools used for purchase, or only on the tools used for sale, well we might be adjusting the wrong thing.
It also helps to have a mechanistic focus on which to pin the blame when stuff goes south :)
Which leads to
1. We can see what would have worked in the past, but we didn't see it then and doubt that we will see it going forward. This is always the hardest part. And undesirable. But should we be content to just let things sit there? Thankfully our ancestors thought similarly about tigers and bacteria and all kinds of other "no see um 'till they get you" things. And figured out how to detect them and counter them.
IMHO, there must be a piece of toolkit missing for next time.
It seems to me at least that valuation was the missing link. Not just "valuation", but "effective valuation". Many people applied "valuation": "XYZ is a steal at $xx", or "I think PDQ is overpriced at $yyy". So it's not to say that folks didn't do valuation. Just that the tools and methods in use were not effective.
Or weren't effectively applied. Which is probably closer to the truth.
Not surprising, because it is NOT in anyone's interest to teach the world at large about valuation. Otherwise how do you legally foist something worthless off on someone else who thinks it's worthmore?
No blame. Just an opportunity to learn.
John. |
