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Bubble talk (2015)

blog.samaltman.com

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Re: Bubble talk (2015)

#41

Post by username90 »

AznHisoka wrote: post #35
username90 wrote: post #20

Earlier quoted context omitted.

It checks out if you move the much larger valuations in bet 2 to bet 1 as he really underestimated the companies in bet 2. Things are a bit random, so I'd say he arguably won the bet in spirit even though he didn't do it according to his own exact rules.

Aka he lost the bet :)

Sam Altman's bet isn't interesting in itself, as it looks today the market was significantly undervalued in 2015. Even Sam Altman's pretty aggressive estimations undervalued it, he just guessed wrong on which players would become big. So it definitely wasn't a bubble.

Re: Bubble talk (2015)

#42

Post by H8crilA »

AznHisoka wrote: post #34
H8crilA wrote: post #27

Earlier quoted context omitted.

Yeah, a better bet would be about those companies actually delivering profits and "growing into their vaulations", as people politely put it. None of those companies have earned a single dollar for shareholders. Not a single dollar.

Didn’t early stage investors in Uber and Pinterest made money when they IPO’d?

I said "companies delivering profits", not "people making money trading the stock". I'm sure speculation can be profitable on such volatile securities, after all volatility is everything for traders. But there's nothing here (so far) for a fundamentals based long term investor to write home about. Zero.

Re: Bubble talk (2015)

#43

Post by MichaelApproved »

H8crilA wrote: post #27
blantonl wrote: post #14

The market can stay irrational longer than you can stay solvent.

Yeah, a better bet would be about those companies actually delivering profits and "growing into their vaulations", as people politely put it. None of those companies have earned a single dollar for shareholders. Not a single dollar.

> None of those companies have earned a single dollar for shareholders.

Is that what shareholders are asking for, right now? Don’t they want fast growth more than they want profits?

Re: Bubble talk (2015)

#44

Post by H8crilA »

MichaelApproved wrote: post #43
H8crilA wrote: post #27

Earlier quoted context omitted.

Yeah, a better bet would be about those companies actually delivering profits and "growing into their vaulations", as people politely put it. None of those companies have earned a single dollar for shareholders. Not a single dollar.

> None of those companies have earned a single dollar for shareholders. Is that what shareholders are asking for, right now? Don’t they want fast growth more than they want profits?

I suppose, yes, and this is a little scary - the world being in such a state that you can wait 10 years for a company to make profits and it is still considered OK. Cheapening money.

But also how much longer can we wait? Google, Apple, Microsoft and Facebook were all turning profit before the IPO! Find the old S-1s if you don't believe me. And back in those days IPOs happened much much earlier.

Re: Bubble talk (2015)

#45

Post by MichaelApproved »

H8crilA wrote: post #44
MichaelApproved wrote: post #43

Earlier quoted context omitted.

> None of those companies have earned a single dollar for shareholders. Is that what shareholders are asking for, right now? Don’t they want fast growth more than they want profits?

I suppose, yes, and this is a little scary - the world being in such a state that you can wait 10 years for a company to make profits and it is still considered OK. Cheapening money. But also how much longer can we wait? Google, Apple, Microsoft and Facebook were all turning profit before the IPO ! Find the old S-1s if you don't believe me. And back in those days IPOs happened much much earlier.

I think Amazon is one of the rare examples where it paid off. They were making losses in exchange for extreme growth in many sectors.

Re: Bubble talk (2015)

#47

Post by zozbot234 »

aetherson wrote: post #46
zozbot234 wrote: post #31

There was definitely a trade collapse that might have impacted valuations somewhat.

I don't think that the trade war had disproportionate effects on Altman's prop 1 companies.

Altman's bet was about absolute values, not proportions. The trade collapse impacts those as much as anything else.

Re: Bubble talk (2015)

#48

Post by ghaff »

username90 wrote: post #41
AznHisoka wrote: post #35

Earlier quoted context omitted.

Aka he lost the bet :)

Sam Altman's bet isn't interesting in itself, as it looks today the market was significantly undervalued in 2015. Even Sam Altman's pretty aggressive estimations undervalued it, he just guessed wrong on which players would become big. So it definitely wasn't a bubble.

And over 10 years ago, people were joking about bubbles in the context of companies like Facebook. https://www.theguardian.com/technology/blog/2007/dec/19/here...

Whatever is to come with e.g. the decreased interest in the public markets for loss-making companies with no apparent path to profitability, the last 10 years have apparently not been a bubble for any reasonable definition of the term.

Re: Bubble talk (2015)

#49

Post by stereolambda »

JohnJamesRambo wrote: post #32
virgilp wrote: post #15

Earlier quoted context omitted.

Uber: 50.73 bln Spacex: 33.3 bln? Airbnb: 35 bln? Palantir: 26 bln ? Pinterest: 10.4Bln Dropbox: 7.44 Bln They are far from $200bln, so he certainly lost the first one. Might have won the other 3 though.

To me, the outcome is just another example of the power of diversification and that we really don’t know anything about which stocks or companies are best. Stripe alone made Bet 2 worth it.

I'm inclined to read it as early opportunities having the highest average growth potential. Big companies are more likely to be already around their actual ceiling.

Re: Bubble talk (2015)

#50

Post by aetherson »

zozbot234 wrote: post #47
aetherson wrote: post #46

Earlier quoted context omitted.

I don't think that the trade war had disproportionate effects on Altman's prop 1 companies.

Altman's bet was about absolute values, not proportions. The trade collapse impacts those as much as anything else.

The prop 1 companies underperformed Altman's expectations in a way that the market as a whole, and the prop 2 and prop 3 companies, did not. Explaining that via recourse to a trade war is difficult.
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