> "market expectations are primarily built on faith in the future, which is an entirely irrational basis for economic decision-making"
Faith in some version of future events is the only rational basis for economic decision making. You pay present money in the hope of future value, because otherwise you'd simply retain the present discounted value of the purchase price.
As long as that faith isn't blind, but instead well researched and based on a defensible thesis, there's nothing wrong with it.
On a company-by-company basis, it's practical to evaluate how much of the company's market value derives from intangible components like goodwill and market position, but it's much harder to do it on the scale of an entire economy, which is what the analysis in the article claims to do.
It's more reasonable to look at capital intensive industries like manufacturing and agriculture and see if their Q values are historically high. Lumping compannies like Adobe and Apache into that same group and using the same metrics for the whole group is disingenuous.
Faith in some version of future events is the only rational basis for economic decision making. You pay present money in the hope of future value, because otherwise you'd simply retain the present discounted value of the purchase price.
As long as that faith isn't blind, but instead well researched and based on a defensible thesis, there's nothing wrong with it.
On a company-by-company basis, it's practical to evaluate how much of the company's market value derives from intangible components like goodwill and market position, but it's much harder to do it on the scale of an entire economy, which is what the analysis in the article claims to do.
It's more reasonable to look at capital intensive industries like manufacturing and agriculture and see if their Q values are historically high. Lumping compannies like Adobe and Apache into that same group and using the same metrics for the whole group is disingenuous.