Time is money

Monday, 26th April 2021 09:11 - by Moosh

The price chart of a company is usually the first thing to research. This is about as technical as I will get with it as anything more than this is anathema to the majority of investors. A price chart demonstrates that time IS money. A price chart exists with two dimensions – price and time. While many view price to be the overriding factor in buying decisions, time is actually something that needs to be considered. As a long term investor the relevance of time is important for me to acknowledge as my buys are not lump sums in any company but are bought in tranches over an extended period of time. Instead of thinking I have bought V shares and that’s it, I consider the aspect of time and calculate Vt, the product of volume held and time held. Therefore the longer the time held, Vt grows, and on a macroscopic scale the price of a company also rises when the cumulative Vt of all holders grows with time, hence time is money.

In relation to the price aspect, what does price really show? In my opinion...

Price is a reflection of communication, which is a consequence of organisation

Let’s unpack this statement:

Communication refers to the company communicating with relevant parties in a timely fashion who support the business, including:

• Finance providers
• Company broker
• Investors, institutional and retail
• Employees
• Government bodies

Organisation refers to the company’s ability to arrange the following to maximise newsflow generation in a timely fashion, including:

• Funding
• Project choice
• Project management
• Project timing

 As a long term investor, I am keen to choose companies which understand these basic principles, with directors who have the capability, flexibility, and vision to build a listed company which can attract the desired target long term audience. Every company on the stock market is in competition with each other to attract capital, be it from institutions and/or retail investors, preferably long term holders and regular buyers, so it makes sense for a company to be one step ahead of its competition by ensuring the fundamental drivers of communication and organisation are in place in order to stand out from the crowd.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.