The fish market framing earns its place because it explains short-term moves without mystifying them: a margin call is a supply shock, not an opinion about the business. Pairing points one and two is the useful part, since most beginners get taught one or the other, and each alone misleads: businesses without prices breeds complacency, prices without businesses breeds panic. Telling the two apart only ever matters on the days they disagree, which is exactly when it is hardest.
Rising capitalisation is the red flag I watch most too. WorldCom's fraud began with about $3.8 billion of ordinary line costs booked as capital spending, which flattered both earnings and operating cash flow.
The fish market framing earns its place because it explains short-term moves without mystifying them: a margin call is a supply shock, not an opinion about the business. Pairing points one and two is the useful part, since most beginners get taught one or the other, and each alone misleads: businesses without prices breeds complacency, prices without businesses breeds panic. Telling the two apart only ever matters on the days they disagree, which is exactly when it is hardest.
Rising capitalisation is the red flag I watch most too. WorldCom's fraud began with about $3.8 billion of ordinary line costs booked as capital spending, which flattered both earnings and operating cash flow.
Thanks for sharing this mate!