Thursday, March 11, 2021

Thoughts #23: Honesty and Integrity

It is very difficult to hide intent and the truth will always be revealed. This is because we are all sentient beings. We can feel, empathize and understand other sentient beings. That is why even though animals do not speak, we feel for them. Dog owners intuitively know if their dogs are happy or sad, sick or about the face death. 

In many sense, this is very similar to stocks. Truth is intrinsic value. The reason why stocks will always revert to its intrinsic value it because that is the true value. It cannot trade way above or below its intrinsic value forever. If it is way below, someone, someday will take over and benefit from it. Conversely, if it trades above, it will fall. Or in case of an overpaid buyout, someone will suffer. The example that comes to mind is Time Warner overpaying for AOL.

This is the same with lying, dishonesty and doing things without integrity. 

Someone, someday will figure it all out. Well it depends on the scale and atrocity of it all. If you lied about test score and burnt the test paper, maybe your parents will not find out this time. But do it enough, the truth comes out. Good deeds and bad deeds cancel out. You can make amends. Alas, we are just too lazy to do that right? If we got away once, we will do it again. Hence the saying, 

"Don't go down the slippery slope."

There are people who doesn't believe in all this crap. They believe that can forever puff it up and pretend they are something that they are not. Well, after all, Trump did become President and Jack the Ripper did get away. They believe there are ways to be rich, or famous, or powerful, with lies, threats, dishonesty, dis-integrity and Ra-Ra. They believe they can have enjoy the fruits of success without putting in the effort.

Courtesy of Wall Street Club

This is very similar to some stocks that sell some castle-in-the-sky story and skyrocket to the moon. They believe this can go on forever. But sadly when you are judged by the stock market, with millions of intelligent investors, the truth will always come due. You can punch above your weight for a while, but the market will knock you out sooner or later. The Enron story comes to mind (chart above and link below).

https://wscbits.wordpress.com/2012/11/02/enron-wasnt-just-enron/

That is what I see happen to people who ra-ra too much in real life as well. Other people see the intent and the truth behind the puff, smoke and lies because we are all sentient beings. Trump's debacle is playing out. He will go down in history books as the only US President who got impeached twice. I believe we have not seen his bottom yet. If he doesn't hit bottom that can only mean in his life, he had done enough good things to offset the bad that we don't see. 

So, if we adhere to be true value investors, buying stocks below their intrinsic values maybe we should strive to live a life of honesty and integrity, don't ra-ra, punch our weight right, not above and not below. Strive to promise and deliver (not over-promise and under-deliver). Compound our own intrinsic value the hard way, with discipline and effort.

Huat Ah!





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