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My view on what's going on in the financial markets and the global economy, and a few other things that might interest me from time to time.

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An Asset is Worth What the Market Pays for It

This past week has been more of the same, with U.S. equity futures indicating a positive start today (Friday Aug 21st) as we round out the week. In general, August continues to be rather predictable.  This disconnect between the real economy and financial markets is so severe that many “old-time” investors (include me in that camp) struggle to understand how this can be, but the reality is that prices of financial assets reflect supply and demand.  Traditionalists focus on tearing into companies and developing a valuation range based on companies’ fundamentals like revenues, cash flows, industry growth trends, competitive landscapes, etc.   Today, this valuation range is a data point and nothing more.  An asset is worth what someone is willing to pay for it, and all of the analysis that one might do is subordinated to market forces.  This is true regardless of the fundamentals or backdrop.  It is this investment environment we find ourselves in at the moment, like it or not.  As hard as it is for me to say, perhaps the best advice for investors is to sit back and enjoy the ride.  And if you own Tesla, congratulations for figuring this out early! 

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