Comment by stjeanluc

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stjeanluc
January 20th, 2014 at 11:17 am

Hope… Good article!

http://macro-man.blogspot.co.uk/2014/01/hope-narcotic.html

Equity analysts seem to completely miss this function of hope or expectation when they look at a stock. Their expectations are back modelled from past company performance rather than looking at the big world around it and factoring in a hope through opacity function. A dollar bill is worth a dollar (though some would argue that it isn't anymore) but a share in a biotech start up or a film investment is massively geared on hope. High P/Es isn't it?. Which then leads us to suggest that P/Es are the representation of hope but by heck where do you pin down what is normal because we tie ourselves up in a hope derivative of hope.

But hope is an important part of the psychology of markets. And it should really be allocated a value as it is peddled mercilessly by those that want to enslave "I can't give you what you want but I can give you hope that I can" and those who want to avoid admission of failure. Why take a stop loss when you have hope? – Just ask the lot who just move the date of expectation after the non-appearance of an apocalypse. 

Hope may be a wonderful narcotic but in the wrong hands it can do as much damage as good.

"Hope is the overdraft on reality"