What’s the difference between thinking for yourself and following the crowd? A study of markets and crowd behavior that may prevent human misconceptions that can harm both your present and your future
Dear reader,
Palantir rose 144% in a year, only to fall around 17% in the last days.
However, Palantir’s meteoric rise has been followed by a brutal reversal. Over the past six trading sessions, Palantir shares plunged more than 17%, wiping out $73 billion in market capitalization and marking the largest drop since April. — Fortune.
They proved the point of market (what is the market???) irrationality in just a few weeks. It surged, then followed with a brutal reversal. Can the mystical “market” behave in the same way when AI slows down? Will it eventually slow down? If it’s not a trend, it may never happen again… Will it happen again? We don’t know.
…In recent days, Palantir has also been the worst performer in the S&P 500, illustrating an extreme swing from hero to villain in the market. — Fortune.
If it rains, we’d better have an umbrella. If it rains too much, we take our coat. If it becomes a non-stop storm, we’d better read a book… and create more optionality, protect our present and future by thinking wisely. We can’t fight the law’s of nature.
Continue to call it the market, and people may continue to find it difficult to reason.
Take the case of Palantir: you can listen to opinions, look at prices—its multiples and indicators—that may confuse the reader, maybe for a reason, which we are trying to understand here… They can follow what other people say, read the news… the crowd media. Or you can simply read the company. How business and finances really work…Learn to read business… What does the company do? What is its business? How does it earn money? It’s a factual question.
The content below was originally paywalled.
Call it people’s behavior, it’s simple to understand, investor’s behavior may become rational, trader’s behavior it becomes alogical. What’s the real edge against markets and inflation? Palantir has proven the point.
Crowd behavior
What’s the difference between thinking for yourself and following the crowd? You don’t have reason. We find interesting. Often some may spend more time reading about the news, or trying to understand the stock prices, rather than trying to understand the company itself. If you do… it can be enough, if you don’t understand, maybe it’s not your fault.
It’s within us missing the point… a stock raises +300% nobody notices. It falls abruptly, everyone is concerned. The same dysfunctional mechanism make people loose health little by little, one less step at a time. Then “abruptly” some concernes may follow… they may be asked to change paths, to adopt a new attitude towards life. People change in two ways, when they suffer an emotional impact, and the other.
People may look to Palantir as an AI company, maybe they are, maybe they are not… they are a proven concept of applied knowledge to solve costly mistakes in business and government. As a software company, it’s main power relies on the ability to comprehend what other’s don’t, apply data, analytics, models and solve, or at least demonstrate the problem in a different perspective. While companies revenue are not growing as fast as they are, they are applying knowledge, systems and tools to solve other’s markets and companies problems. As if they don’t solve their problems they can hire a model and very capable people to rely on.
That’s what other wise, sometimes not intellectual people say. If you want to grow fast, have the right people on the bus with you, hire people better than the team’s average and keep doing it. Inflation won’t be a problem if you grow more than the market, inflation, cost of capital.
That’s the case of a carpenters that works with high-end wood mobile, inflation for them was about 5%, and cost higher, however, their sales prices raised 300% up. Optionality may bring us asymmetrical gains. The same applies to building more skills and mental models to your brain. Gain emotional self-management.
More coming.
Regards,
Marini
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