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Price Is Not Just the Truth, It Is the ONLY Truth

If one wants to argue price is not truth, then I will happily trade with you.
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I want to take the flip side of the coin about price. This morning, Doug Kass declared "Price Is Not Truth" and I couldn't disagree more. Price is not only the perception of the truth, but also what a trader can buy or sell a stock for in that given moment.

There is no greater truth than money when it comes to a stock. Cash is truth.

If one wants to argue price is not truth, then I will happily trade with you. If one were to believe Tesla (TSLA) is only worth $200, then I will buy shares from you today at $200. Still think 3M (MMM) is overvalued and truth is lower, then I will buy shares from you at your "true" price. That's all it takes before the argument changes because no one would EVER do that.

Lest we forget the market is a FORWARD pricing mechanism. Price today is truth. A change in price is the reflection of what we believe will happen in the future based on new information received. MMM's change in price Thursday is not due to a lack of truth, but a change in perception of what the future offers. And as we all know, perception is reality; ergo, truth.

Doug made a fundamentally cautious argument near the end of January. His predictions evolved into truth. Today. It was a fantastic call based on fundamentals; however, during that same period the stock moved higher by 10-14%. For those selling during that time, their gains are truth. The price they sold did not change because the price was a lie, a figment of their imagination.

Declaring price is not truth is a misnomer. It is a reflection of the middle ground buyers and sellers believe offers them more risk than reward for their view on truth. They believe tomorrow's truth, the forward pricing mechanism, will change the middle ground in their favor.

I think the debate should evolve around market efficiencies rather than price and truth.

Are the markets price efficiently?

Has the rise of algorithmic trading and ETFs caused efficiency to degenerate?

Is the push for information flow actually too quick to decipher correct interpretations (in the short-term)?

These questions deserve their own space.

If I have one takeaway it is this: Price is the ONLY truth.

At the time of publication, Collins had no positions in any securities mentioned.