The Myth of Market In-Itself: Things That Matter #3, Pt. 1

We spend billions on research to find the "true value" markets will eventually recognize. Financial media explains daily price movements with confident narratives. Yet prices are ultimately set by whoever is willing to pay most and whoever accepts least at any given moment. If that's all there is, what are we actually discovering when we analyze markets?

• Price and value are not the same thing. Price is determined entirely by human behavior in the moment. Value, if it exists at all, is forever hidden behind the veil of what people subjectively decide to pay for something today.
• Financial explanations are invented after the fact. Oil didn't fall because investors took profits. Stocks didn't move because of North Korean headlines. These stories emerge because humans need narratives to explain movements we don't actually understand.
• The "voting machine eventually becomes a weighing machine" is probably false. Convergence to fundamental value requires someone to eventually buy at that price. That someone is still a person with subjective preferences, which means behavioral forces never stop operating.
• Most of your analytical effort is misdirected. Asset owners spend less than 5 percent of their time thinking about who else owns an investment and why they might sell. They spend 95 percent on models and data while ignoring the actual mechanism that moves prices: other people's behavior.
• The real question isn't whether a company's earnings will grow. It's whether the market will maintain its willingness to believe and fund that narrative for the next decade, or the next 50 years. Fundamental value judgments matter only if someone keeps paying for them.