RE: UKNM: More overvalued stocks

[Steve Johnston]

>

From: Clay Shirky [clayshirky [dot] com (mailto:clayshirky [dot] com)]

> > > > Agreed, but is 'the mutual agreement of the interested parties'

> > > > what is actually going on here - other than in the most literal

> > > > sense.

> > > 

> > > What's wrong with the literal sense of worth? Surely it 

> is the literal

> > > sense people are interested in when they are working out a mutual

> > > agreement, no?

> > 

> > Clay, I was referring to a literal sense of 'mutual 

> agreement', not the

> > sense of worth. 

> 

> Same question then - what's wrong with a literal sense of mutual

> agreement? You seem to be suggesting that there is some notion of

> transactional value that doesn't involve mutual agreement, but I am

> having a hard time imagining where that value could be derived, if not

> from the assessments of the people involved.

> 


It seems to me that company stocks (or speculative investments

generally) are an unusual case. Is it not that *my* 'mutual agreement'

is better than *yours* because my knowledge of 'all available

information' is better than yours? I buy your original point completely

about the market being efficient over time, and that short term

imbalances - particularly those evident shortly after an IPO - are what

forces the prices to converge on a point of truth. However, right now,

Freeserve is overvalued because the point of truth will be lower than it

is today. The 'mutual agreements' going on are based not on what the

stock is worth now, but on what it may be worth in the future and that

hysteria and imperfect knowledge is fuelling the fire. 


To return to your point above. I agree that mutual agreement drives the

transactional value, but drawing conclusions of the real value from the

transactional value without factoring in the knowledge of the

participants is flawed. Over time however, I agree, this averages out

and the market determines a more realistic value.


Steve Johnston

steve [dot] johnstonentranet [dot] co [dot] uk

Mobile +44 (0)7901 853273

Office +44 (0)1491 878787 

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