2015, March.
Original title lacked a date -- and comment pointing out the omission gets downvoted. Such downvotes are destructive to the quality of information on HN. @dang?
Bubble talk (2015)
61–70 of 80 posts
Re: Bubble talk (2015)
#62>Of course, there could be a macro collapse in 2018 or 2019, which wouldn’t have time to recover by 2020. Which hasn't happened... There was another thread about bubble and calling me out. Just to point out, If you bought S&P Index in 2015 you would now have roughly 200% return. But this is in the context of tech. We forget Apple, Microsoft, Google are not just doing fine , they are doing great. And not just in US, T…
> Are we in a bubble? No, at least not yet.
I agree with everything you said except for this. Not because I am definitively saying we are in a bubble, but just pointing out it's impossible to know if we are. Very few people saw the last financial collapse coming.
Re: Bubble talk (2015)
#63Seems odd to me to deny bubble talk, then base "success" on market cap. Outsized market caps are associated with bubbles. There are a few companies in there for which survival is questionable.
Re: Bubble talk (2015)
#64Datapoint for reference: if you invested in an SP500 fund during the same time you would have roughly doubled (around 180%) your money (an annualized return of 11%).
That's the proper comparison. Investing into startups and unicorns should provide significant yield over diversified and less risky investment. Getting the same result from taking more risk is not a good investment. from the end of March 30, 2015 +56% SP500 Price index +70% SP500 Total return index +83% Nasdaq price index Uber, Palantir, Airbnb, Dropbox, Pinterest, and SpaceX doubling their valuations would give only…
How is investing in companies which are already 100 bn in valuations more risky than SP500?
I am sure all investors who put money in these companies when they were risky, made very good returns, far more than SP500.
Re: Bubble talk (2015)
#65His bet was a parlay so it lost, but not by a lot. Had he been able to include Snapchat it probably would have done worse. I think what we’ve seen in the last five years is that there’s some bubble-like irrationally exuberance but overall it’s far from 2000 all over again. Companies have high valuations but this time also often have financials and growth prospects to go with them.
Matt,
When will portfolio 1 reach $200B?
Michael
Re: Bubble talk (2015)
#66Earlier quoted context omitted.
That's the proper comparison. Investing into startups and unicorns should provide significant yield over diversified and less risky investment. Getting the same result from taking more risk is not a good investment. from the end of March 30, 2015 +56% SP500 Price index +70% SP500 Total return index +83% Nasdaq price index Uber, Palantir, Airbnb, Dropbox, Pinterest, and SpaceX doubling their valuations would give only…
How is investing in companies which are already 100 bn in valuations more risky than SP500? I am sure all investors who put money in these companies when they were risky, made very good returns, far more than SP500.
It's not the size but the way they operate:
* plan is to forego profits to gain market share, negative earnings
* free cash flow is negative
* lots of debt.
Dropbox -40%, Uber -28%, Pinterest -23% since the IPO.
Re: Bubble talk (2015)
#67Although Sam would have lost this bet, I respect that he had the courage to make a forecast with a specific number and a specific future date. Too many pundits make grand but imprecise predictions like "AI will become dominant in the next decade". The book 'Superforcasting' tackles this problem in detail: https://www.amazon.com/Superforecasting-Science-Prediction-P...
If I recall correctly, the bet was accepted.
EDIT: Ah, I found documentation:
"Michael de la Maza, a Boston-based investor and TechStars mentor, has taken my recent bet on valuations."
Re: Bubble talk (2015)
#68Many here are claiming he lost the bet on #1, but consider the details:
Predicted Aggregate value: $200B
Actual value: $145B (Math in [1])
His prediction is off by 25%. Technically a lost bet, but I'd say a prudent bet as a VC.
As for #2, #3, he wins them outright. Overall, being 25% off the most optimistic prediction isn't too bad a loss. I'd say he won the argument convincingly.
I will note that anyone above average intellect in his position (as an investor with gobbles of analytics, best in class prediction models and advisors, and access to thousands of high quality pitches to see down the pipeline) would likely predict as he did, so while he won, he wasn't clairvoyant, he was merely following the data.
[1]: Math: Uber: $50B
SpaceX: $35B.
Airbnb: $35B
Palantir: $25B
Pinterest: $10B
Dropbox: $7.5B
Re: Bubble talk (2015)
#69Seems odd to me to deny bubble talk, then base "success" on market cap. Outsized market caps are associated with bubbles. There are a few companies in there for which survival is questionable.
The idea of the bet was that if there was a bubble in 2015 it would have deflated by now.
Re: Bubble talk (2015)
#70Although Sam would have lost this bet, I respect that he had the courage to make a forecast with a specific number and a specific future date. Too many pundits make grand but imprecise predictions like "AI will become dominant in the next decade". The book 'Superforcasting' tackles this problem in detail: https://www.amazon.com/Superforecasting-Science-Prediction-P...
If I recall correctly, the bet was accepted. EDIT: Ah, I found documentation: "Michael de la Maza, a Boston-based investor and TechStars mentor, has taken my recent bet on valuations." https://twitter.com/sama/status/582292425449730049
Thanks for using Twitter to remind Mr. Altman of the bet.