He technically has until March of 2020. I still think there’s a chance that he pulls #1 off (SpaceX pulling off human flights in Q1 and re-raises, Airbnb going public as a profitable and defensible business, Uber and rationalization in ridesharing and delivery + continued execution)
Bubble talk (2015)
71–80 of 80 posts
Re: Bubble talk (2015)
#72He technically has until March of 2020. I still think there’s a chance that he pulls #1 off (SpaceX pulling off human flights in Q1 and re-raises, Airbnb going public as a profitable and defensible business, Uber and rationalization in ridesharing and delivery + continued execution)
...no? He said it himself, he has until January 1st of 2020. He lost the bet.
Re: Bubble talk (2015)
#73>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.
The last financial collapse had many companies claiming paper valuations of assets. Companies like AAPL/MS/GOOG/FB have significant net income with significant moats around their products that still have plenty of room to grow as they all move to subscription income.
Re: Bubble talk (2015)
#74Earlier quoted context omitted.
> 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.
The last financial collapse had many companies claiming paper valuations of assets. Companies like AAPL/MS/GOOG/FB have significant net income with significant moats around their products that still have plenty of room to grow as they all move to subscription income.
It's always easy to come up with justifications for why "this time it's different" and people will be doing that even after the stock prices are already declining.
It's impossible to foresee an unknown unknown.
Re: Bubble talk (2015)
#75>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.
https://imgur.com/a/7ntUkKC
That is a simple chart of recent 30 Yrs S&P 500 P/E.
> Very few people saw the last financial collapse coming
While media points the last financial collapse blame to CDOs, the fundamentals of it was housing prices. May be it is new to many Americans, but for those who have lived and seen through Japan, South Korea, Hong Kong housing prices collapses in the 90s, it was rather obvious. I remember the moment when I mention it in 2005 and 2006, but no one believe market would collapse, the idea of housing prices would fall was literally unheard of.
Now there are concerns of Cooperate Debt reaches new height, which is often the argument of bubble. The trouble is you cant look at cooperate debt alone and judge it. Amazon is 25B in debt, but they have 45B in cash. Apple are 100B in debt, but also ~250B cash. Amazon were issuing at 10 years and yields about 3.2%, for reference US 30 Yr treasuries has been floating at around 2.4 The vast majority of companies are swimming in cash. ( There is less of it now because of buy backs, which is what pushes those stock prices up )
So while the market, and general economy may not be healthy, I argued it isn't in a bubble either.
Re: Bubble talk (2015)
#76Earlier quoted context omitted.
> 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.
https://imgur.com/a/7ntUkKC That is a simple chart of recent 30 Yrs S&P 500 P/E. > Very few people saw the last financial collapse coming While media points the last financial collapse blame to CDOs, the fundamentals of it was housing prices. May be it is new to many Americans, but for those who have lived and seen through Japan, South Korea, Hong Kong housing prices collapses in the 90s, it was rather obvious. I rem…
> So while the market, and general economy may not be healthy, I argued it isn't in a bubble either.
You're completely missing the point. You can make arguments either way. Hindsight is 20/20. You're making an educated guess based on data which is informative, but it's theoretically impossible to predict a Black Swan event. And even without a Black Swan event, your analysis could be wrong. It's not like all analysts agree on much (if anything) - so how do you decide who's right when nobody has a perfect track record? You're making the best guess you can and I respect your analysis, but I don't assume it's correct.
My point is simple: nobody knows for sure.
Re: Bubble talk (2015)
#77His 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
I certainly don’t know.
Re: Bubble talk (2015)
#78Earlier 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.
Are you saying that all one needs to do is put money into the risky companies that will succeed and avoid the risky ones that won't?
Re: Bubble talk (2015)
#79Earlier quoted context omitted.
https://imgur.com/a/7ntUkKC That is a simple chart of recent 30 Yrs S&P 500 P/E. > Very few people saw the last financial collapse coming While media points the last financial collapse blame to CDOs, the fundamentals of it was housing prices. May be it is new to many Americans, but for those who have lived and seen through Japan, South Korea, Hong Kong housing prices collapses in the 90s, it was rather obvious. I rem…
> So while the market, and general economy may not be healthy, I argued it isn't in a bubble either. You're completely missing the point. You can make arguments either way. Hindsight is 20/20. You're making an educated guess based on data which is informative, but it's theoretically impossible to predict a Black Swan event. And even without a Black Swan event, your analysis could be wrong. It's not like all analysts…
I sort of agree with what you said.
>My point is simple: nobody knows for sure.
Absolutely. I am suggesting to those who consistently points to doom's day needs better explanation rather than just debt alone.
Edit: Actually it was my understanding that all bubbles, by definition must have some form or irregularities or speculation. After all that is what bubbles means, turns out when I was going to quote wiki for this reply, I discover there are whole set of economic papers suggesting bubbles completely unrelated to its intrinsic value and economic fundamentals. Will Read those paper when I have time.
Re: Bubble talk (2015)
#80Earlier quoted context omitted.
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.
Correct me if I'm wrong, but Amazon was strongly cash flow positive as of 2002. Moreover, their operations were throwing off cash the year they went public (1997).
Everyone should be considering this a bit more because it says something about the irrationality of the current market. Large VC funds were investing under the thesis that some of the current crop of (now) less than impressive unicorns could follow the Amazon model: invest in growth at the expense of net income. These unicorns haven't simply failed to produce positive net income by intentionally following the Amazon model, rather they've simply burned through mountains of cash following less than impressive business models. They never followed the Amazon model to begin with.