M&O: The Allure of Speculation
M&O: The Allure of Speculation
The American dream seems to have shifted. Our standards of living and the features on our vital products have grown. Prices reflect these increased costs both nominally and inflation adjusted. They weigh heavier on the average citizen’s mind. “Getting ahead” seems less achievable through conventional standards. I have seen the American dream shift from one of performative labor to speculative guile.
Speculative financial markets seem less tarnished by these assumptions of difficulty, at least relative to the upside they could provide. The allure of such speculation seems omnipresent in the minds of the middle class. It seems, to these people, that the gap in business speculation is small while in financial speculation there are more occasions to profit with less time and fewer resources invested.
Information Parity
These markets are predicated on information. The present information of earnings or even some future plans are already “priced in”. Where does this leave market participants? To be successful they must intuit, speculate, guess, or even stumble upon success by accident.
They are looking for an information gap. Nature abhors a vacuum, but they can exist for short times. Like tornados or the release of lightning from a storm these corrections in entropy are powerful. The best way to find one of these information gaps is to look for something the market might have incorrectly priced in relation to future market consensus.
Bubbles and “dark horses” are two forms of information gaps. With bubbles the market over-estimates and for the “dark horse” the asset is undervalued. Participant’s can profit from both.
Competent participants in a market results in less un-applied information More information makes it easier to apply it. More chatter that occurs, the less un-applied information there is. More incompetent participants then there is a higher likelihood that the information acted on is bad. More irrelevant information there is for an asset the more complex it is.
Information gaps will occur with an excess of bad information or incompetent participants. Assets that meet these criteria are usually novel and less regulated. Novelty and regulation often have an inverse relationship. A lack of regulation is the price premium for the meta-advantage of an information gap.
Information gaps can exist for “stale” old or over regulated assets as well. Competent market participants have often moved to less competitive markets and information gaps widen in these stale markets. Too many competent participants would unseat the interest of the true market makers, so the barriers to entry are raised through regulation.
Human interests plots similar to a bell curve. Then we have novel assets on one end and stale assets, the other. Deviation from the mean is indicative of their potential for either innovative or misinformed information gaps. Given enough time these assets lose novelty and staleness. Steep corrections in attention they are paid.
Counter-Trade Reputation
Reputations of entities should be judged relative to the market its analyzing. Value is rarely found at consensus. At best these standards help one keep pace with competitors. At worst they actively hinder a participant. A market speculator ought to avoid “news”. It’s either reactive or propaganda. If neither but insightful and predictive it has utility. Similar utility exists when an entity is consistently wrong as you can counter-trade. Consistent utility will build reputation of the entity. Consider a publication, personality, or forum you once enjoyed that eventually deteriorated. The reason this happened is because it became too good not to be taken advantage of.
The magnitude of reputation is what is important, so long as the vector is extreme. Once a large enough group of people come to rely on such an entity they will be approached with increasingly large offers to lever their reputation. User-bases and even the hierarchy of an entity itself can be co-opted and the prospect of levering a sufficiently powerful entity’s reputation is enough of an incentive to provoke people into wresting control of the entity.
Ephemeral
Your speculative asset, favorite shit-poster, guru, niche hobby, community, nice town, forum, business, and fictional world will probably face these market pressures and likely not be strong enough to stand against them. The turnover of online communities comes to mind. Advertisers will try to capitalize on viewership once it gets large enough. Celebrities face a similar cycle. Official entities such as corporations, intellectual properties, or cities fare even worse. A nice city with a low cost of living or preferential tax policies can only be obscure for so long.
Over time the bureaucratic hierarchies will provide such an incentive that outside actors will have no choice but to pursue their own interests and infiltrate. This is true for any entity with a hierarchy of power. Community based entities usually become consumed or fractured.
Are good men allowed to create good things and remain undisturbed? If they are small enough. Most people would like to profit from what they are diverting their interest and time towards so they either pursue a larger clientele or ask for more profit.
The profit necessary to justify it usually grows. What remedy is there for this? The creator can stay hidden and purposely avoid reputation. This works until someone identifies a pattern and connects pseudonyms. Another option is to be unpalatable, socially or otherwise. The creator can have an idiosyncrasy, opinion, or embedded feature that deters people from participating. Given that overton windows shift so to must these deterrent features. This can make the creator seem inconsistent in their convictions.
Are they allowed to create undisturbed? If what they are making is good enough, no. In the best of cases you can hope that a person will either disappear quietly without compromising the vision that made their content or product special, or produce works with a somewhat unpalatable anonymity. If you are lucky you might find them again under a different name. This spirit of a pseudonym exists for assets, brands, products, and even the forces that create larger structures like communities. They call these spiritual successors, I think.
Call to action!
By Blue Animus, Edited by GRITCULT.
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