Lights, Camera, Action

Not all money decisions are born equal, even if they have the same price. Price is a photograph of the edges, rather than a movie of the life. The angle, lighting, and perspective of the viewer all have an effect. When money changes hands, it can be to (1) consume, (2) buy, or (3) invest. After consuming, the buyer has nothing, and the money is gone. After buying, the buyer has a passive thing that may or may not hold its value. The money may, or may not, be retrieved. After investing, the buyer has “nothing” but their money is working. If the money does something useful, its price will grow or it will get a stream of income. Passive Things are easier to price. Especially if they are tangible, simple, and with steady supply and demand where the price is confirmed by swapping hands. Investments are based on potential. The work they will do in the future. The price is a quote for a piece of that potential, and gets affected by waves of short-term uncertainty. Long-term investors don’t swap their investments regularly, so the price is distorted to amplify the voice of short-term gamblers. Price is not value. What something does matters significantly more to value. A single frame doesn’t make a movie.