December 21, 2018

When value means anything but

Questions influence wealth creation

Value means many things. Unless we know what it is, we can’t measure it. What we can’t measure, we can’t be certain about. And we know how little symbiosis between uncertainty and value. As the ponderer that I am — was the corporate scene seemed, rather, forgiving the value loss, just because the right question(s) were never asked?

Consider a coin toss classroom experiment. One hundred and fifty dollars for heads, and a $50 for tails. If we asked the students about the outcomes of a few attempts, we will tally answers of either $150 and $50.

But, if we asked, instead, “what everyone is willing to pay for the coin toss?” things take a different turn. The reasoning shifts from a mere speculative and opinionated listing to a weighted-probability exercise. Then, pricing follows, capped at $100. That reasoning is based on the expected outcome. .5×150+ .5×50

The difference between the two questions is non-trivial. The first question was answered by speculating and suspecting the outcomes. While the second, by the simple rules of math, immune of subjectivity. In other words, questions influence our conclusions. What we asked steered towards seeking the expected outcome, as to their expected outcome.

Specifying value by asking the right questions matters to us; or, value will mean anything but.

-Abdulaziz Alnuaimi

It’s not profit, cash flows, or EBITDA of; it is the wealth of nations. I left the alternatives space to only seek that prosperity truism. Picture — an invite-only corporate intelligence firm principled on value investing, to preserve and grow the wealth of nations.