cryptocurrency has the argument that it doesn’t represent anything tangible. It simply has a collectively agreed value. But salt, which we buy for Rs 2-20 depending on the variety and amount, was once currency. The shares represent the goods and services, borrowings and lendings bonds, the gold standard has its equal measure. Yet, goods, services and debt bonds, as well as gold, have no value unless they are valued. How can we assign value to things we don’t measure?
Yet, we do it every day. We do this based on the company’s reputation, ethics, promise of fulfilment, standing of their board, and their work ethic. However, regardless of how expensive an IPO may be or the amount of hype it generates, people won’t subscribe to the company if they don’t believe in the company. The sum of all the socio-psychological assets that a company has is its intangible wealth.
This week has proven that the intangible is more important than the tangible backing a company receives. Markets can sense a scam when there are dubious backers.
To make our lives more meaningful, we also assign intangible value. This can be seen in the form art which is valued more than its materials. Salvatore Garau, an Italian artist, sold his sculpture of the Buddha ‘I Am’ to a buyer for 15,000 Euros in 2020. It was made from nothing, which was a statement about the Buddha’s Shunyata principle as an absolute truth.
Love is the source of value
Love is the source of value, something poets and artists have tried to explain for millennia. But we still don’t know what it means. It is impossible to define happiness or the things that make us happy.
A coordinated process of psychological and spiritual inquiry (or simply watching Succession ), will reveal that the super-rich are still miserable. The intangibles are what make our lives worthwhile. They include the sense of purpose, belonging, feeling productive, and the pride that comes with success or positive feedback. While some of these have tangible output, you still pin your daughter’s artwork to your softboard long after realizing it doesn’t have any intrinsic value. You have value in the memories of your daughter’s childhood.
Values can also be tangible or intangible. Tangible value is derived from its association to another thing that is intrinsically good. Because it is intrinsically good, intangible value has value.
Employees are allowed to take vacations, even if they cause delays in meeting deadlines. This is because their happiness and work/life balance is intrinsically good. Companies make the mistake, however, of only valuing it in terms of tangible benefits. This is because metrics that show productivity increases when an individual is well-rested are not a measure that values the intangible asset. If a company gives employees time off so that they can exploit them later (e.g., your boss may give you extra work after you return from vacation), you are reducing the value of your time off. As with the Great Resignation people quit their jobs when the gap between the assigned intrinsic value and tangible value is greater than the pay increase.
Because it is intrinsic, intangible value cannot be diminished by external forces. Intangible value will always outweigh tangible value. You can say “I’m not going to work after 6 o’clock in the morning for my own safety.” This is where you decide what you will prioritize. You are more likely to follow it like any good investor. However, exiting without putting your portfolio at risk is also easier.