rffrydr
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Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
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 Posted: Fri Oct 22, 2010 7:48 am Post subject: The Fashion Model |
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"Money will out"....the blessing and bane of every "value investor." Too often it's "the rich get richer...."
Game Theory and high fashion:
http://www.3quarksdaily.com/3quarksdaily/2010/07/how-supermodels-are-like-toxic-assets.html
| Quote: | | In fact, the economist John Maynard Keynes likened finance markets to casinos, in that both are based in speculation. To illustrate, Keynes drew on newspaper beauty contests from the 1930s, where readers were asked to rate the contestants, but with a catch. The prize would go to the reader that could guess the highest ranked winner. So readers would rate not what they themselves thought was personally beautiful, but what they thought other readers would find beautiful. The sociologist would add that beauty is always in the eye of the socially-dominant beholder, but as a metaphor for financial markets, it should worry us, as it worried Keynes: Finance assets accrue profits not according to their actual worth, which, at the height of the housing boom we know now was vastly inflated; rather, their worth is generated in how speculators perceive what other speculators will perceive. A finance market, like a fashion market, consists of speculators chasing each other’s tails in disregard for what things are really worth. |
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Today is the Tomorrow you worried about Yesterday! |
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