RE: [asa] A parable of three investors

David, do you do business deals?
 
David O. wrote:
>Interesting allegory. But let's add another twist: let's say all three of
the investors were dead wrong. None of the data
>was adequate to predict that a massive war would break out in the middle
east which would roil the commodities
>markets. Nor was the data able to predict a new breakthrough energy
technology based on nuclear fusion. It was the
>same story as many other "disruptive" technologies, like automobiles,
personal computers, and the internet. The
>conventional data weren't up to the task of predicting the "creative
destruction" the new technology would bring, even
>though all the contemporary analysts were quite familiar with Josehph
Schumpeter.
>
>But, a fourth investor -- let's call him Bill -- had a hunch that all the
talk about the old commodities was wrong. Bill didn't
>spend much time studying data, but he just had a "feeling" that all the
conventional wisdom must be wrong. He played his
>hunch, investing his nest egg in the penny stock of Fusiontech, Inc., a
company doing research into nuclear fusion. Bill's
>friend's were horrified -- everyone knew that the handful of "scientists"
who claimed to make progress towards man-made
>nuclear fusion were at best quacks and at worst liars. Roll the dice with
computer tech stocks, or play it safe with proven
>commodities like oil, Bill's friends said. Bill didn't listen to reason.
 
In the context of the parable which is about the theological positions, I
would note that at least Bill is doing something DIFFERENT! Frankly the
herd mentality is what I am griping about. So, I applaud Bill. He may fail;
he may success, but he isn't a sheep in the herd. He is a hunter, looking to
make an impact on the world with his life! If only more people would try to
be a pioneer.
 
 
>Bill is now one of the wealthiest men in the world, having eventually
bought up most of the shares of Fusiontech before its
>record-breaking IPO. Ken died in the middle east war a few years ago.
Ken's heavy investment in oil wiped out all his
>savings and he took a high-paying consulting job in Baghdad to make up the
loss.
 He was captured by insurgents and
>beheaded when the third battle for Baghdad started.
 
The unreality of this part of the scenario is that when societies change
from one form of energy to another, it takes 50 years to build the
infrastructure. This was true with steam, this was true with oil. Cars were
invented in the 1870s but most Americans didn't have one until the 1930s.
Even today most people in the world do not own a car. So, in reality, Ken
would have time to sell off and be rich. A mere anouncement of a
breakthrough does not mean that instantly new generating plants appear
miraculously. Because of this, Bob himself, didn't get rich. IPO's don't
happen until one has plants and a business which is making money. Thus, Bob
doesn't get to IPO things for 30 years. He dies one year short. His kids get
rich.
 
 
> Henry is in jail for fraud, but not because of Enron. Henry's interest
>in Enron led him to study the oil industry in an evening MBA program, after
which he took a job as an environmental
>consultant at a big oil company. He was caught falsifying data about the
environmental impact of oil drilling in Alaska,
>along with dozens of other big oil exectuives.
 
Because no one in that supermajor ordered Henry to do that (because they all
know the consequences), Henry is paying for his crime, but it is merely one
of utter incompentence and stupidity. He didn't know how to invest and he
doesn't know didly about the environment. He also is too stupid to get away
with anything, just like his idol Kenny Lay
 
> Bob did ok -- he now works as a VP of Technology at Fusiontech, Inc.,
>which holds the patent on the method used to produce energy safely and
economically using nuclear fusion. All of the
>stock brokers involved now sell real estate or life insurance.
 
Bob is dead before the new technological infrastructure is built. His kids
and grandkids emulate Paris Hilton.
 
 
glenn
They're Here: The Pathway Papers
Foundation, Fall, and Flood
Adam, Apes and Anthropology

http://home.entouch.net/dmd/dmd.htm
  

 
On 10/28/06,

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Received on Sat Oct 28 21:24:14 2006