Markets always win

Markets always win

In capitalism, there’s only one really important rule. Markets always win. You stand zero chances if you go against the market. Markets determine a big part of your life. If you choose the right markets, things will go well for you; if not, you’ll experience only struggle, pain and failure. You may fight against the market for years and at the end, you’ll probably be brutally knocked out to the floor, no matter how competent you are. You may lose everything and markets will laugh right in your face.

The brutal thing is that even if you don’t want to play the game, you’re playing the game.

In love life, your sexual market value more or less determines the quality of the partner you can attract. It’s usually someone in your range of sexual market value. It’s like you have a number on your forehead. Trends on the job market have a big influence on whether you’ll be employed or not, how much you’ll earn and how quickly you’ll get promoted. You can be the best in something no one wants to buy and you’ll be poor. If you’re an entrepreneur and don’t have customers who want to buy your products, there is no market and there is no business. Most startups fail because there’s no market.

A market is not a nice thing. It’s like a moody, perpetually dissatisfied cruel person leaving no room for negotiations, no room for discussions or compromises. Either you hit the spot and make the market happy or you’re out of the game. You can even make the market happy several times in a row and then fail it, and yet the market won’t spare you any pain. Markets are copy-cats of nature; and nature can be the most beautiful experience in the world or the cruelest one. That’s also why so many people criticize capitalism.

Let’s take a step back now. What is a market, really? Well, it’s nothing but supply and demand. Markets are nothing but people voting with their resources, be it with money, attention, love, sex or anything else.

Supply and Demand

If you can provide something in great demand and of scarce supply, you’ve hit the spot. If you supply something that’s in big supply and short demand, markets will ignore you and you’ll be poor. Offer something people want, but not many can do, and you shall prosper; offer something anyone can offer, and few people want, and you shall be one of many waiting in a long line, hoping that maybe someone spots you; and they probably won’t.

There’s a good story representing this connection between creating, delivering and capturing value, and markets. An old couple is walking in the park. The grandpa gets a heart attack and collapses on the floor. A young person passes by. Grandma, completely panicked, asks the person if they know CPR. The person responds: “I’m a really good person.” Grandma says that she doesn’t care about that, she only wants to know if the person knows CPR. The person responds again: “I’ve also finished college and work really hard.” That’s nice and all, but can you do CPR?

The point of the story is that markets only care about the things you can supply. Money knows no racism, no borders and don’t care about your history. Markets don’t care if you’re a good person, in love or not, the only thing that the markets care about is the value you can provide.

The formula is simple: no value, no money. Well, it’s not that simple, of course. There are many different types of value a person can produce. It can be social value, attraction value or whatever. For example, a good teacher produces a great social value, but not that much of a financial value, because supply of teachers is quite bigger than demand.

I’m definitely encouraging you to find the right balance between market value and social value, but you should never leave market value out of the equation. When we speak in terms of business (financial markets, career markets, startups etc.), “no unique value proposition, no money” is the golden rule.

The biggest problem with markets is that it’s not easy to be in a position where the demand is great and the supply falls short. It’s one of the toughest things in the world. Most people who hit the sweet spot do it based on pure luck. Others struggle for years before hitting it, after putting huge effort into strategizing, innovating, analyzing and failure; and even then you need to have a lot of luck. The good news is that you have to be right only once, the bad news is that it’s extremely hard to be right even once. But understanding markets can help you a lot to progress faster in life.

Everyone’s dream should be to have a monopoly in some niche market for a short period of time. A monopoly is definitely not good for the general society, but it gives a great advantage to an individual, even if only for a short period of time. Everyone would like to have a monopoly, everyone would like to be on top, maybe just to taste it, even if they don’t admit it to themselves. Monopoly is how you get on the top.

Monopoly game

There’s even more. We want to control the markets, not only as individuals but as a society as well. In the same way as we try to control nature. Nature and markets, they both make us feel insecure. That’s why we have the government and government interventions. To control the markets and to control nature (with all its resources, threats, borders etc.).

The sad thing is that most interventions bring a new set of problems, like inefficiency and corruption. Controlling the beast is no easy task, and people more often hurt themselves than not. Going against the markets is hard, controlling them is even harder. Sooner or later, market meltdowns and scandals happen. But that’s how we organized the world.

Now let’s look at the markets from a brighter perspective. What can you do to understand markets more? The first thing you have to do is un-ego yourself. We all have assumptions about the markets. We think other people want what we want, like and dislike the same things, use technology in the same way etc. In most cases, we have wrong assumptions and wrong assumptions are the mother of all fuckups. That’s the main point of the lean startup theory and its first phase of building a startup, which is empathy.

When you un-ego yourself, you become empathetic, you listen to the voices on the market, you observe what people respond to, you search for what people are prepared to pay for.

In the second step, you should stop following your passion and start following your effort. Rather than idealizing life, you look at the hard facts. What markets really want that you can actually provide. There is no place for romance, idealism or egoistic behavior towards the markets. Only supply and demand. The good news is that with time following your effort and seeing all the results passion will also develop. But…

If you ignore the market, the market will ignore you. As already mentioned, you have to be aware that even if you don’t want to compete, you are competing. You’re voting with your resources and other people use their resources to vote on how much value you can provide for them. There’s no escape.

With your birth, you were put on different markets and dealt different cards. Talents, family money, beauty, intelligence, and your hard work, they’re all building blocks of your capacity to prove your value on the market. The more of them you’re born with, the better position you are in. That’s definitely a big advantage in the short term, but not necessarily in the long term. That is to say, good times make soft people, and things like the Dutch disease can happen. And hard and smart work always put talent (or other given things) to shame. It’s up to you how you’ll play game of life.

No matter what, you should respect the markets, learn its rules and play the best game possible. When thinking about markets (financial markets, job markets, consumer markets etc.), you should analyze short-term and long-term trends, you should always stay empathetic, constantly acquire new market insights and quickly adapt to changes. You must know how to manage your ego and your false assumptions by constantly, testing, experimenting and innovating.

Go with the markets, make the markets your best friends and you shall prosper; put ego before the markets and you’ll stay alone and miserable. It’s that simple. Your competences are your downside protection. If you’re very competent, you’ll always make something out of your life. Markets define your upside potential. If you hit the right market at the right time, you can win big. But if you’re competent and hit the right market, something magical can happen.

So start learning about the markets. Here’s a nice set of videos with all the basic information: https://wetheeconomy.com/films/cave-o-nomics/

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