Towards the end of last year, I published a series of short posts on what I saw as a newly emergent but potentially powerful trend in financial markets, in which sentiment seemed to overshadow analysis and fundamentals as a driving force. In light of recent eventsthat is, the surging stock price of GameStop and related others, the explosive influence of retail traders and the message boards where many converge, and the observed ripple effects into other parts of the investment worldI am combining the original articles into a longer essay, edited for consistency and to eliminate…


When an economy is understood, up or down, it’s possible to plan, to concentrate resources, and to invest with reasonable confidence, even if results don’t follow as expected. Below is a market thesis for the year ahead, which may be different from those behind, in an economy that isn’t understood and can’t be trusted.

  • The life-long economic plans and actions of an individual — an education, a career, a residence — are concentrated investments that can’t be easily diversified or hedged, offloaded, changed, or liquefied. …

There are any number of ways to define, or interpret, sentiment. As with many definitions and interpretations, this can depend on context. For financial markets, which are multivariate and deep, the context and its drivers, the resulting definitions and interpretations, are like a mosaic — personal, social, geographical, political, historical, economic, industrial, educational, speculative — and it’s all speculative, really. The markets are a network system in which clusters form or dissipate, to varying degrees, to build or shrink the sentiment of an idea in its particular time.

In a narrow finance sense, a definition that may be most closely…


The last two posts in what is turning out to be a sort of mini-series have been about the emergence of sentiment as a principal driving force in 2020 financial markets. The first, The most basic fundamental, lays out the initial argument and identifies some key resulting market aspects in such an environment. The second, The biggest risk, outlines the ways in which financial value metrics are being gradually displaced by pure sentiment, which unlike traditional reference points is difficult to quantify and even more so to predict. …


Our favored valuation multiples have over time climbed up the income statement ladder, rung by rung, and, before long, we may transcend the income statement altogether.

We used to chart the P/E multiples back when, feeling as though earnings were a close enough cash flow proxy, which then was what we really cared about. D&A, it was implied, was capital investment to replace the old, so that E and FCF resembled one another well enough. In the next phase through the years, when CAPEX was replaced by software builds — a direct income statement item for most — the valuation…


Financial markets are sentiment markets, even as we feign to strip out the emotion from the buy or sell decision. It is a matter of degree, perhaps, and self-control, to stick with data, the practiced formula and its principles, the so-called fundamentals that are taught. Even in so doing— rigidly, consistently, like a machine — one makes a statement about one’s view, or of a view that one envisions, and by contrast about all the others who may or may not share it. That’s not something lacking in emotion and there’s no escaping sentiment. Even algorithms and black boxes are…


1.

The thread of which this post is a continuation began with an early look into what have since become the Big 5 (Apple, Amazon, Facebook, Google, Microsoft) at a time when their market capitalization leadership was still a novelty. In Networks 3.0: Defined by digital dimensions (2016), the argument was made that these aren’t technology companies as a defining measure — as was and commonly still is the accepted classification — but rather multi-dimensional network platforms with deep network effects, whose rich network qualities were the driving force behind their (at the time, new) leadership position. …


This short post is a Fall 2020 update to its two predecessors — Markets and the year(s) ahead: Post-digital edition (December 2018) and Markets and the year(s) ahead: Digital edition (January 2017) — which collectively set the stage.

  1. The economic and financial market decoupling isn’t a true separation but rather a timing issue, which runs parallel to a decoupling of market liquidity (technicals, near-term) and intrinsic value (fundamentals, long-term).
  2. The current market is dominated by the former (i.e., money flows), the noise and tumult of which overshadows business analysis and economic undercurrents, given the directness and relative immediacy of money…


This time is different. It really is. As software keeps on eating of the world, the new strategic and valuation analysis is rooted in network science. The following is a short read — unless you click through the assorted links — in keeping with the subject.

WSJ — The Big U.S. Stock Indexes Are Telling Different Stories

The categories on which we continue to insist make little sense and getting littler with time. We still insist on calling them consumer, industrial, financial, telecom and so on. We also call one isolated category tech, as though the notion can be isolated still, like it was (arguably) before becoming universally adopted.


If the economy were a single business, it would now be a restart, with aspects of a startup, in the post-pandemic world. This is a new form, with new behaviors and results that can be unpredictable. It is different from a recovery, which is a continuation but with an improved trajectory. The following commentary is an atmospheric review of conditions in this context.

Both sides now

The economy is a multi-sided market. Many have tried to build such a platform, and a few have succeeded. To build and scale, and then support a multi-sided market, each of its core components — the sides…

Dan Ramsden

Investment, finance, strategy, execution in the networked tech economy. https://www.linkedin.com/in/danramsden

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store