Why most investment advisors miss the forest for the trees
Public markets are priced relative to power and plumbing, not textbook “free markets”.
Looking at the bigger picture
If you value companies only on Earnings/Cash Flow/Assets, you’re pricing the visible tail while ignoring the hand on the tiller. The superior lens is State-Embedded Value: Policy utility + Perimeter power + Standardization + Admissibility + Defaults. Find the platforms where those five stack - and buy them before they’re safe to explain.
Public markets are priced relative to power and plumbing, not textbook “free markets”. Winners aren’t just great businesses; they’re the operating layers the State standardizes on when consent is scarce. Those layers get mandates, exemptions, and defaults. Your edge is to own these state-embedded platforms before consultants can say the quiet part out loud.
What You’re Really Valuing
1) Policy Utility (PU)
Does the product increase the State’s legibility (identity, audit, provenance), programmability (money, media, infra), or decision compression (detect→decide→act)?
High PU → budgets persist through cycles; “emergency” spend ratchets.
2) Perimeter Power (PP)
Can the State enforce adoption via app stores, banks, clouds, ISPs, payment networks - without passing new laws?
High PP → fast adoption, low legal risk of rollback.
3) Policy Synchronization Coefficient (PSC)
How quickly do similar rules appear across allied jurisdictions?
High Policy Synchronization Coefficient (PSC) → global Total Addressable Market (TAM) for the same product knobs.
4) Admissibility (AD)
Does the platform emit signed, auditable artifacts (lineage, consent, rollback, revocation) that survive courts, regulators, and FOIA?
High AD → replaceable “analytics” become non-substitutable evidence.
5) Default Surface (DS)
Is the product on by default in the place where people already work (OS, productivity suite, payments rail, ERP)?
High DS → adoption without sales; lock-in via configuration, not persuasion.
6) Procurement Friction (PF)
ATO/IL5/IL6, export controls, classified clearances.
High PF → newcomer barriers; incumbents renew.
7) Cross-Bloc Demand (CBD)
Multiple blocs need it (defense, chips, identity, cyber).
High CBD → resilience to single-state politics.
8) Cashflow Shape (CF)
Mission subscriptions with multi-year renewals, usage growth tied to new mandates, not ad cycles.
High CF → draw-down survivability, compounding.
9) Narrative Constraint Premium (NCP)
Is the real reason it wins “unmarketable” (surveillance, governance, coercion knobs)?
High NCP → under-owned until index inclusion, and generally under-owned because of Overton Window management.
Filter: Separate Keystones from Extraction Vehicles
Keystone (buy/hold)
Solves permanent state problems (identity, audit, ISR, resilient payments).
Lives inside compliance & evidence (Admissibility: high).
Policy Synchronization Coefficient (PSC) rising → copy-paste into new countries.
Default in an existing system (M365/OS/cloud/ERP).
Earns “must-run” budget (security, tax, health, defense, courts).
Extraction Vehicle (avoid)
Sells optics or one-off “pilots” that never become defaults.
Minimal lineage; can’t survive discovery/regulator scrutiny.
Revenue tied to grants/PR, not renewals.
Lives outside perimeters; can be throttled by Acceptable Use Policies (AUPs).
Timing: When to Add, When to Trim
Add (fear = entry):
New rules/Requests for Proposals (RFPs) with verbs: attest, prove, trace, revoke, rollback, lineage.
App store / bank / cloud Acceptable Use Policies tightening (perimeter doing the law’s job).
Policy Synchronization Coefficient (PSC) spikes (same standard appears across allies within months).
Value at Risk (VaR) events (VIX/MOVE spike): forced sellers dump liquid winners first.
Trim/overwrite (clarity = distribution):
“Regulatory clarity” PR flood.
Index inclusion / consultant framework adoption.
Mega-award headlines after the run.
Translating the thesis into stocks/assets
Policy OS / Decision Admissibility
Palantir: cross-domain fusion; policy lineage; court-ready artifacts; crisis playbooks.
Microsoft (Gov/Entra/Purview/Compliance/M365): default surface for identity, records, retention, DLP.
Cyber: Critical Infra with Liability Shift
PANW (EDR/XDR/platform) → when insurers/regulators tie controls to underwriting.
This translates to:
In terms of state-embedded companies: PLTR > MSFT > PANW.
In terms of assets: PLTR > Bitcoin > Gold > MSFT > PANW.
I go into more detail in my State-Embedded Investment Thesis (SEIT) article.
Red Flags (don’t get seduced by the uniform)
Pilot rot: 12–18 months of “successful pilots” with no default setting or policy verbs → tourist revenue.
No evidence artifacts: “AI insights” with no lineage/rollback → non-deployable at scale.
Consultant-dependence: Revenue = billable hours, not sticky SKUs.
Perimeter fragility: can be crippled by a single Acceptable Use Policy (AUP) change at an app store, bank, or cloud.
Policy Synchronization Coefficient (PSC) divergence: one country buys; allies do not. No harmonization → no scale.
Meta: Why This Works (and keeps working)
Gross Consent Product (GCP) is low (consent scarce), so rulers buy infrastructure, not arguments.
Ratcheting makes “temporary” controls stick; defaults become norms.
Forced-seller math (VaR, margin, redemptions) hands you entries in precisely the names with non-cyclical demand.
What most investment advisors miss (and you shouldn’t)
Incentives > ideals: who gets paid for what behavior, by default?
Perimeter > Parliament: can app stores/banks/clouds enforce it tomorrow?
Proofs > models: does it output admissible artifacts (lineage, consent, rollback)?
Defaults decide: is it on where people already live (OS, M365, payments, ERP)?
Policy Synchronization Coefficient (PSC) rising: are allies copying the same rule?
Buy fear / sell clarity: fear makes forced sellers; clarity fattens IV.
Follow revealed preference: watch budgets, standards, Acceptable Use Policies (AUPs) - not speeches.
Keystone or extraction?: permanent problems vs PR grants.
Own the cockpit (PLTR, MSFT): surveillance → control → programmable enforcement.
Be unforced: no leverage; provide liquidity when mandates force others out.
Bottom Line
If you value companies only on Earnings/Cash Flow/Assets, you’re pricing the visible tail while ignoring the hand on the tiller. The superior lens is State-Embedded Value: Policy utility + Perimeter power + Standardization + Admissibility + Defaults. Find the platforms where those five stack - and buy them before they’re safe to explain.
I’ve provided more context in my State-Embedded Investment Thesis (SEIT) article.
None of this should be considered investment advice.
Most of what I’ve written in this article is not very controversial amongst the top ~1% of market participants or the top 5-10% of defense-aligned funds (DAFs).
However, it is not information most of retail has access to, nor is this type of investing openly marketed.