Chapter One
The Number on the Screen
The number is easy to fall in love with. It is clean, specific and new. It moves while the rest of the page stands still, giving the eye somewhere to return. If it rises, it can make a decision feel wise. If it falls, it can make yesterday's decision feel foolish. Neither reaction tells you much about the thing whose price is moving.
Imagine a screen showing a share at forty units of money. We will call those units coins, because the currency does not matter. At one moment somebody bought a share and somebody else sold it for forty coins. The screen can report that transaction exactly. It cannot report that forty is a fair assessment of the company's future. It does not tell you whether a buyer could obtain a large number of shares at the same price, or whether a seller could dispose of them all without pushing the price down. The number is a record of an agreement, shaped by the people present at that instant.
We often speak as though a price belongs to an object in the way its weight does. A chair weighs what it weighs even if nobody enters the room. A market price depends on people willing to trade. Tomorrow's people may have different information, different needs and different patience. The chair can remain the same while its market price changes. A business can also change while its price stays still for a time. Confusing the two directions creates two common mistakes: treating every price move as news about the underlying asset, and treating a quiet price as proof that the underlying asset is safe.
