SpaceX and the myth of independent Wall St research
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Re: SpaceX and the myth of independent Wall St research
#2Re: SpaceX and the myth of independent Wall St research
#3Money talks, even through the walls that should keep analysts and bankers from talking.
And fomo is human.
We need transparency combined with widespread education and high trust so folks believe the few that investigate. All these pillars are needed - that's why we see attacks on all of them.
Re: SpaceX and the myth of independent Wall St research
#4TLDR research teams at nearly all the big Wall St banks wrote bullish reports on SpaceX and recommended buying it, some with very optimistic projections. The author says you can't always trust these reports because these banks also have a financial incentive to sell management services. Also covers how there is existing government regulation by Spitzer from 2003 dealing with this situation, where research teams are kept independent of the sales side but implies that doesn't eliminate financial incentives entirely, but also claims the regulation is still well enforced within banks. Other Wall St investment firms allegedly don't rely on these reports heavily and do their own research before investing.
Nothing too deep here.
Re: SpaceX and the myth of independent Wall St research
#5Que? Market analysis thinks SpaceX sucks as a stock.
Heck, it goes against all my value investing instincts for me to even have 2% of my net value in it. To be fair however, 15% of my net value came from Tesla. I obviously have brain worms.
Re: SpaceX and the myth of independent Wall St research
#6Like every other group, there is some amount of groupthink happening with Wall Street analysts. They all came to similar incorrect conclusions because they are working with similar information using similar techniques towards similar goals. This creates a level of bias, even if banks didn't have incentives to write bullish projections.
Getting a diversity of opinions doesn't mean talking to 10 experts in the same field, but talking to experts in 10 related fields.
Re: SpaceX and the myth of independent Wall St research
#7Que? Market analysis thinks SpaceX sucks as a stock. Heck, it goes against all my value investing instincts for me to even have 2% of my net value in it. To be fair however, 15% of my net value came from Tesla. I obviously have brain worms.
It’s not about fundamental value, it’s about how rational everyone else is.
Re: SpaceX and the myth of independent Wall St research
#8Like every other group, there is some amount of groupthink happening with Wall Street analysts. They all came to similar incorrect conclusions because they are working with similar information using similar techniques towards similar goals. This creates a level of bias, even if banks didn't have incentives to write bullish projections. Getting a diversity of opinions doesn't mean talking to 10 experts in the same fie…
It's not Group Think I would say, more capitalism. SpaceX has all the big name banks and VCs and investors involved.
So the banks know that if they don't fall in line, the VC's may not select them for future IPOs/make them lead bank and also not use them for other work. And the banks know that the big name investors who invested in the VCs are also their high net worth day to day clients buying their services.
The banks loyalties and financial interests are not in protecting normal everyday people, it's protecting their business and individual bonuses. (SpaceX paid around $600 Million in fees for the IPO! And that's after negotiating a low percentage).
The news sites know that if they speak out of line too boldly, they won't be 1st in line to get exclusive stories and invites to events. Or Advertising Spend.
It's for governments and regulators to put rules in, otherwise capitalists will carry on in their own interests.
Re: SpaceX and the myth of independent Wall St research
#9Que? Market analysis thinks SpaceX sucks as a stock. Heck, it goes against all my value investing instincts for me to even have 2% of my net value in it. To be fair however, 15% of my net value came from Tesla. I obviously have brain worms.
It’s not about fundamental value, it’s about how rational everyone else is.
Yep. Keesian Beauty Contest!
(Dear Reader, if you have no idea what that is, it's a good idea to know about in my opinion)
Re: SpaceX and the myth of independent Wall St research
#10Like every other group, there is some amount of groupthink happening with Wall Street analysts. They all came to similar incorrect conclusions because they are working with similar information using similar techniques towards similar goals. This creates a level of bias, even if banks didn't have incentives to write bullish projections. Getting a diversity of opinions doesn't mean talking to 10 experts in the same fie…
> This creates a level of bias, even if banks didn't have incentives to write bullish projections.
I don't necessarily disagree with you, but I think this is misleading. The bad estimate of fair price is _overwhelmingly_ due to incentives for bullish projections. I have no source to back this up, aside from common sense. SPCX is supposedly an AI-company now, even though we all know this is a lie. It's AI-only revenue within 5 years[1] is projected to be larger than most SP500 companies' full revenue today[2]. On the face of it, this is silly, and I don't accept that all the analysts group-thought their way to believing it.
[1] https://finance.yahoo.com/sectors/technology/articles/goldma...