“the economy” & the gap between facts and marketing-based perceptions

people-meeting

Sincerity vs. Accuracy

There has been tremendous success in the field of marketing to get the masses to perceive certain things to be true and, then, based on those orchestrated perceptions, to take certain actions (like make certain investments). The marketing industry markets what is most profitable for the advertiser, with little or no regard for what is most profitable for the the buyer. Marketing is a for-profit industry, right?

gold 4 years

English: ESIC Business & Marketing School 01 E...

English: ESIC Business & Marketing School 01 Español: ESIC Business & Marketing School 01 (Photo credit: Wikipedia)

Profit-Margin = Sales Price – Cost

Marketers and commission-earning brokers (and professional lobbyists) are in business for profit, and so are the companies that hire them. Profit means the difference between the sales price and the “cost.” The entire marketing industry is about causing people to perceive something to be worth more than whatever it costs to sell it to those prospective buyers. Marketing is to create profit margins and then increase those profit margins. Is that totally clear so far?

Sidenote: I entered the marketing profession in 1999. I also began publishing forecasts of the major “surprises” of the last decade in 2003. Here is a question that I asked in 2004 that became quite popular within a few years?

A key question from the 2004 publication: "The Real US Deficit: OIL?"

A key question from the 2004 publication: “The Real US Deficit: OIL?”

So what we have now (in the US and many other places too) is a situation in which the marketers have gotten the public in general to pay enormous amounts of money for things that can be delivered for much less than the market price. That is not really all that radical, right? The only function of marketers is to create and increase profit margins, right?

But what if the public has even been lured in to enormous debts (such as mortgages) in order to make purchases driven by misperceptions guided by the marketing industry? What if the public perception about the value of many investments is “way too high?” Well, that means that the marketers have been doing their jobs well and that the profit margins for the companies hiring those marketers have also been growing.

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The Value of Marketing: enhanced Profit-margin = marketing-based misperceptions – cost

SALE

SALE (Photo credit: Gerard Stolk (Retour à la maison ))

Next, what if other investments were “ignored” or “dismissed” or “discounted” (like on sale, like unusually cheap)? In that case, there would be both enormous risk for the general public (who are acting based on the false perceptions created through marketing) and also enormous opportunity for the well-informed. Is all of this totally clear so far?

There is a huge gap today between public perceptions and many simple facts. For instance, there are objective measurements of consumer perceptions about expected results as well as many measures of actual results. Further, the gap between perceptions (misperceptions) and actual facts can close very suddenly.

I monitor how big the gaps are and how fast each gap spreads or closes. When huge gaps begin to close quickly, there is enormous opportunity. Again, is that totally clear?

Profit = sales price -purchase price

A re-seller or retailer is someone in the business of buying something at a low price (like at a bulk wholesale discount) and selling it for a profit. What I do is very similar.

I am a trader. I look for things to buy that I perceive to have unusually favorable potential for profit. In other words, I look for gaps between facts about people’s current perceptions and other facts.

hui  4

Within the last few days, below are the prices of the 5 trades that I have made. All of these were not single purchases, but purchases of a quantity of investments in a bundle (for multiple units of the same investment):

bought $50, sold for $91

bought for $12, sold for $17

bought for $17, sold for $6

bought for $11, sold for $17

bought for $12, sold for $21

lady with fan of cash

Sometimes I sold within half an hour of buying. Other times, I held the investments overnight. As a trader, I bought specifically with the intent to sell. In the cases above, I was intending to sell within a few days at most.

That is short-term trading, but it is not fundamentally different from long-term speculation. Consider someone who gets some cash. They get the cash specifically with the intent to use it for something else. There is some speculation of the future purchasing power of the cash (a presumption or expectation).

Or, consider someone who gets some gold. They might get the gold for something like making jewelry to wear themselves or, more typically, they might get it as a speculative investment: with the specific intent to later sell the gold for something else more practically valuable to them. Those people are just getting the gold as a speculative “store of value.” (If someone gets gold to make in to jewelry with the intent to eventually sell the jewelry, then that is also speculative.)

gold trend

The above chart shows a trendchannel in gold prices. As I expected, gold prices eventually fell below the trendchannel and recently had the biggest 3-day decline in at least a few decades.

(The chart below shows the decline in gold. Note that this article was written in April of 2013, then updated a year later with the next chart.)

5 year chart of gold prices

 

By the way, is it possible for a marketing campaign to REDUCE the public perception of value of something? It certainly is. For instance, as a very obvious example, there have been marketing campaigns specifically targeting the creation of public hysteria (“caution”) about the consumption of fat and cholesterol.

Creatures all over the planet keep producing those substances anyway, though.The cells are apparently not especially influenced by the marketing. When there is a perceived scarcity of those biochemical substances, cells just keep producing them. (In fact, every cell wall of every creature on this planet is composed of cholesterol.)

smiling lady holding a fan of cash

So, the sole purpose of MOST marketing is to increase demand for something. (Though some marketing programs target reducing demand for other alternatives.)

When there is a relatively low cost to provide something and a relatively high demand for it, that is a context for making a profit. When a retailer can buy it cheap and resell it at a premium, that is a retail profit margin. When a trader can measure an increasing gap between perceptions and other facts, that can lead to a profitable trade.

Note that almost all “investors” are speculatively trading (buying something with the sole intent of later selling it). A real estate investor wants to resell for a profit and/or collect rents far in excess of the purchase price. Someone who buys an annuity contract from an insurance company is speculating that the insurance company can and will keep the contractual promises.

Note that all contracts are inherently speculative. The future promises have not been fulfilled yet and that is why the contract is written down: to make a precise record of the speculations within the contract.

conference-table- overhead

Generally speaking, a trader is looking for the gap between the sincere misperception of value by some other party and some concrete measure of value. As a marketing professional, I have actually focused more in my work on things that people are actively seeking to purchase (and I am just publicizing that my clients offer what the public is actively seeking).

I do that because I am not a leading marketing professional. If I was, then I would be creating perceptions and cultivating demand, not just publicizing a service that people already are seeking.

I have tried “correcting” people’s perceptions by showing them facts. Millionaires can go bankrupt because of their lack of attention to certain facts. Other people can become multi-millionaires because of their attention to those same facts, because of attention to changing perceptions of value (including changes in perception specifically targeted through marketing).

japan nikkei stock index

If you are interested in increasing profits and reducing risk, I invite you to contact me. I promise to partner with you to be mutually benefit from changes in the perceptions of the masses- including extremely sudden changes.

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Note the excerpt from the above article from March 3rd, 2003 in which I reference a future collapsing of the credit bubble, decline of real estate prices (“fed” by an increase in foreclosures), as well as  stock market “divestment” (crash).

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One Response to ““the economy” & the gap between facts and marketing-based perceptions”

  1. Disgusting Acquiescence and The 401K Ripoff | centerlefty Says:

    […] https://jrfibonacci.wordpress.com/2013/04/25/the-economy-the-gap-between-facts-and-marketing-based-pe… […]

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