Guess-the-balls test
Hal Spacejock delivers a shipment of antiques, breaking several pieces in the process. His robot, Clunk, skillfully reassembles the broken furniture, and the grateful customer gives them a jar of ancient marbles.
This jar is 60cm (2 feet) high, with a diameter of 36cm (approx 14 inches). It is completely filled with marbles, each of which is 2.5cm (1 inch) in diameter.
Using that information... how many balls does Clunk have
If you use fundamental analysis, can you really work the number of balls (i.e. intrinsic value)? You work very hard, calculating this and that and try to work out the reasonable number and you think that this is the intrinsic value as you trust that it is completely filled with marbles.
But, you will never know what the Management has hidden inside the marbles? could be anything hidden to give you the impression it is completely filled.
Working very hard work on fundamental analysis may not actually pay off; unlike working very hard work on your job, your boss may recognise your effort and reward you.
Fundamental analysis is more towards Hygiene Factor, doing more of it may not really improve much but you can't ignore it either. E.g you need to brush your teeth 1-3 times a day for good oral hygiene, but brushing your teeth 4-10 times a day doesn't really help to improve much on your oral hygiene but it may be actually harmful to your gum. You definitely need to do some fundamental analysis but may not be wise to spend hours of hard work in digging out details. You will never know what was hidden inside the marbles.
Back to Guess-the-balls test, you do rough calculation and guess the number of balls, and you look at other players giving their numbers, and based on statistics and you may make some adjustment and you then bet your number. How? Lots of easier now?
Posts
