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Agree To Disagree

>> Friday, June 24, 2011

After reading The Little Boy And The Dollar Notes From La Papillion, I noticed a lot of ideas and comments shared.

It just reminded me of situations where everyone has a view and everyone thinks they are correct or have the best answer. Ultimately, maybe only one side is correct. But does it make the other side incorrect?

Yes and No. Yes, they are incorrect because the results proved them to be so in the end. However, No, because, based on the information both sides had prior to the results, they both made valid points and none were the wiser at that point in time. The final results could boil down right to the luck of the draw eventually.

Sometimes it is important to step back and consider other people's point of view. Step into their shoes and take their frame of reference rather than a face off and arguing. You can still disagree with them, but there is no need to put down their view, just be willing to Agree To Disagree.

This happens in a transparent and open market like the stock market. Everyone is constantly agreeing to disagree. Why do I say that?

For every transaction, there is a buyer and there is a seller. The buyer thinks that the current price is cheap and the seller thinks that the price is expensive. They agree to disagree and the transaction is settled. The buyer has his point of view, markets are oversold, good valuations, recovery, TA signals "BUY", analysts recommendations, etc. Similarly, the sellers also have their set of reasons, markets overheated, overbought, recessionary forces, bearish indicators, TA signals "SELL", analysts with SELL calls, etc. Recently, I read on the same page of a newspaper, the headlines of two separate articles: (1) Markets Sell Off Due to Greek Debt Crisis; (2) Oil Prices Ease Due to Impending Greek Debt Resolution.

As defined from what I once read: Price is defined as the amount the next greater fool is willing to pay.

Similar to my posting on the $880k HDB, everyone has their point of property prices. The sellers feel the market will enter a correction. The buyers feel that the sky's the limit. What if the correction never comes and the sellers will be cursing themselves. What if a reversal occurs and the buyers have overpaid. Time will tell, but right now, I agree to disagree.


financialray June 24, 2011 at 6:48 PM  

Hi Lau,

I agree we should agree to disagree. We would not know why buyers will go in even at apparently sky high prices but as long as the buyer has taken all the factors into consideration and know what he is getting into, nobody will know the end result till many many years later.Similarly for any investment, one must strive to learn the topic well and master the skills before taking a leap.

Createwealth8888 June 24, 2011 at 7:31 PM  

One way to know whether we are right or wrong in our investment decisions is to measure our portfolio performance either using CAGR or XIRR against our investment goals or targets.

financialray June 24, 2011 at 7:56 PM  

Hi Uncle 8888,

Too cheem for me. Could u please enlighten me on what CAGR and XIRR is? I only know if I have enough recurring passive income by the time I hit 60 then I have reached my financial goals.

Lau June 24, 2011 at 8:17 PM  

I believe I have read that some where in one of cw8888 post..

la papillion June 25, 2011 at 12:48 AM  

Hi Lau,

Were you there on the cbox when the incident happened? There's someone who insisted that he is right and there's only one way to view a problem about whether we should pay up a loan or use the cheap money to invest. I wasn't pleased with his attitude, hence the inspiration for the post.

Well, I can be extreme in advocating moderation, haha :)

Lau June 25, 2011 at 9:31 AM  

Hi LP,

Nope, so far, have not had time to participate in your CBox before.

Well, some people can be narrow minded. They will only see a smaller world and learn less.

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