Finance analyst So for anyone who has been looking to go to the Drake concert th

Question

Finance analyst

So for anyone who has been looking to go to the Drake concert this weekend has probably noticed that the prices were absurdly high. As an analyst I also noticed several other factors, supply was also high and inventory was not turning over. Sellers were being greedy and exhibiting overconfidence bias, believing that they would be able to fetch prices 3-5x market value. To understand the market you need to understand the buyers behavior as well. This market "sentiment" that is driven by buyers and sellers is what expands and contracts P/E multiples, think optimism vs. pessimism. What kind of buyer in this market would pay that kind of price multiple, someone following "herd mentality", afraid, or a momentum trader, we all know someone who was telling us to buy bitcoin last Christmas at its peak;) The lack of inventory turnover however told me that there were basically no buyers, a market without liquidity, where the asset eventually drops to $0 (like an option). In the last 24 hours the market has flipped as the greedy sellers are now fearful of having worthless paper, top seats have dropped 85%, since the start of me writing this email it dropped another 15%. Inventory also increased. Low end seats have only dropped 50%, telling me the market hasn't bottomed and supply and demand haven't rebalanced. In fact, hold on prices just dropped another 10%, its a dumpster fire out there guys! I'm calling a bottom for floor seats at $150 for tonight. Deep value on Sunday, I believe the market price for a low end seat will drop to less than $40 What does this tell us about value, fair market prices, and efficient markets? What does this tell us about investor behavior? Expanding/contracting P/E multiples as value measure as it relates to "investor sentiment"? Illiquid markets? Buying/selling behavior? The value of patience, especially in an overvalued market? Try to make some observations based on the above or in real time this weekend. A good analyst will think about any tradeable market this way (it's a bit of a curse), I am going to post these questions as a mini assignment, just a few short sentences which will act as an attendance check for our first class. ps. market is in a freefall, just dropped another 10% What time do you think the market would bottom? This would also be a great example of an investors ability to time a market bottom (very hard to do)

Explanation / Answer

The sellers assumed that the value of the tickets was much more than the are actually worth or the fair price. Hence initially assuming high demand and them having the supply to meet it the price of the tickers was 3 to 5 times the actual market value. Fair market price is the unbiased estimate of the potential market price of an asset, here the Drake concert tickets. It is later seen that the inflated price of the tickets moved towards the actually fair market price and the demand was not there or the overvalued tickets. Someone following the "herd mentality" would end up buying the overvalued tickets assuming that the higher price is due to high demand and low supply, afraid that the tickets would be running out soon. later, it is seen that top seats feel by 85% and low seats dropped by 50% and there were no buyers for the over inflated price. Hence due to this the demand also increased, and there was enough inventory to meet this surge. As this article was released the price dropped another 15% (efficient markets) to show that the contents of the email had an impact on the price and it was almost instantaneous, showing market efficiency. Patience always is beneficial in an overvalued market, and an investor with patience in such markets is a good investor as he is aware that overvalued assets tend to move towards their actually fair market value over time, hence patience pays.

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