I caught this analogy of blogging to punk rock in the latest issue of Wired and thought it disagreeable and ironically uninsightful enough to pass on to fellow blog readers and bloggers.

while punk rock might not have lasted very long, there’s always counterculture. It’s just always shifting, flowing, changing, and evolving like fashion and popular music. I’m not saying blogs will be around forever. Perhaps they will evolve and go the way of 8-Tracks. More likely the technology will improve so much that we will feel compelled to give the new medium a new name so we can laugh at the antiquated technology we knew as blogs.

But there’s a massive macro unceasing trend that blogging is a small part of. It’s the free flow of information and ideas. For hundreds of years, pretty much forever, people have sought out ways to convey information and ideas more productively. Telephones, pagers, email, cell phones, Vonage, pony express, the telegraph, Indian runners, smoke signals, CB radios, walkie-talkies, shortwave, passing information down The Great Wall of China, the printing press to more quickly duplicate and share information, print-on-demand, the Websites, etc… Blogs are just another piece of all that. People were blogging long before we called it that through newspaper editorials, simple Websites, online communities, and radio talk shows.

I have to stretch a bit to tie this to the markets, but it’s this kind of lack of ability to see the true nature of something that often causes us to oversimplify the markets. It’s not immediately obvious to us to consider that stock might be governed by supply and demand for stocks in general just as a commodity usually is. We likewise have difficulty understanding that a commodity can at times carry an intrinsic component in its valuation that has nothing to do with supply and demand and everything with speculation. What makes a rare painting worth what people are willing to pay for it? Not the canvas and paint.

The value almost entirely resides in the idea that someone else might want to pay more for it in the future than the present price. Commodities and stocks are also priced this way. The influence of this intrinsic pricing component varies over time. Supply and demand for a commodity can be relatively over time, but the intrinsic component varies with the whims of speculators. Since there has yet to be any good way of measuring this component or forecasting its fluctuations, we often choose to ignore it, preferring to simplify the market down to fundamental information or trying to find patterns in the way prices change. Usually, one way or another seldom both.